Understanding The Role Of A Trustee In Estate Planning

A trustee is someone who is entrusted with the maintenance and care of certain assets. They have specific required responsibilities, and they have rights related to property that they often do not outright own. They have a unique relationship to the two other stakeholders in every trust—the grantor who created the trust and the beneficiaries of the trust. The role of a trustee can be very complicated or very simple, depending on the language of the trust document that governs the trust they are managing. In many situations, having a legal professional help a trustee carry out their role can be a good idea. You may be able to learn more about trustees in estate planning by contacting Fleurinord Law, PLLC. Call 888-904-2297 for more information.

What Are the Duties of a Trustee?

A trustee manages trust assets. Trustees have obligations to the beneficiaries, and they must carry out the specific directions given to them in the trust document. Trustees have detailed duties set out by law in both Texas and Florida. These duties must be carried out, or the trustee may face hefty repercussions. In the State of Texas, if the trustee does not carry out their duties properly, they can be liable to the trust beneficiaries for the damage caused to the trust assets by their actions.

The trust document will set out how broad or limited a trustee’s powers may be. According to the Florida Bar Association, examples of the duties that a trustee will often have include:

• Investing trust assets
• Holding and managing trust property
• Distributing trust income according to the trust documents
• Keeping records of all trust transactions
• Preparing tax returns and making tax decisions regarding the trust
• Answering any questions posed by the beneficiaries of the trust

A trustee must follow a strict standard of care when managing trust assets. In general, a trustee must make reasonable management and investment decisions, with each decision in line with the overall goal for the trust.

What Is the First Thing a Trustee Should Do?

There are a few immediate actions any trustee should take as soon as they learn they have been named as a trustee of a trust. Trustees can often carry out these actions simultaneously as they prepare for their role as a trustee.

Read and Understand the Trust Documents

First and foremost, it is important to read and understand the trust document. With very few exceptions, the trust document controls everything the trustee should and is permitted to do. If the trust is complicated or you are unsure of what you need to do, you may want to contact a Florida or Texas estate planning attorney to get help. Fleurinord Law, PLLC, may be a good resource for new trustees.

Identify and Contact Trust Beneficiaries

As part of the initial investigation of the trust, the new trustee should be sure to identify the trust beneficiaries. These individuals or entities must be made aware of the existence of the trust and understand how to get in contact with the trustee.

In most situations, the trustee will also provide a copy of the trust document to each beneficiary so they can review what their rights and obligations are as beneficiaries. For instance, some trusts set out that income or assets will only be distributed under certain conditions, and beneficiaries are entitled to be informed of what those conditions may be.

Inventory Trust Assets

The trustee must manage all trust assets. To fulfill that duty, the trustee must have a complete understanding of all of the assets of the trust. In many cases the grantor will have provided a listing of assets, but if they did not, inventorying the trust assets can take some time and effort.

Protect, Manage, and Distribute Trust Assets

A trustee’s role to protect and manage trust assets begins immediately. This means that the trustee might need to take quick action to protect assets. For instance, the trustee might need to put insurance in place or physically move or care for certain items. To maintain real property, for example, the trustee might not only need to check on the house from time to time but also pay property taxes and insurance.

The trust documents will also set out how the trustee should distribute assets to beneficiaries. From a beneficiary’s perspective, this may be the most important role for a trustee. As a result, trustees need to know and understand what their role is in distributing assets to beneficiaries based on the instructions in the trust document.

Who Holds More Power, an Executor or a Trustee?

An executor is someone who carries out a decedent’s wishes as described in their Last Will and Testament. Like a trustee, an executor’s role is based on a legal document—the will. Both a trustee and executor have a great deal of power to distribute assets. However, a trustee’s powers can be much broader than an executor’s power because the law allows trust documents to be extremely broad.

For example, a trust can be established that will last many years into the future. As a result, the role of a trustee could last for years as well. In contrast, an executor’s role is designed by law to only last as long as necessary to probate a will. For instance, a trustee can manage investments, distribute income from rental property, and provide funds from other various ongoing income sources until those income sources run out. An executor, in contrast, only deals with an asset’s value at the time of distribution—there is no potential for a long-term management role.

Who Holds the Real Power in a Trust, the Trustee or the Beneficiary?

The trustee’s job is to preserve and maintain the trust assets for the benefit of the beneficiaries. That means that although a trustee has to take a lot more action compared to a beneficiary, the beneficiary is really the person or entity who benefits from the trust.

However, in most cases, a beneficiary has very little say about how a trust is managed, unless the trustee is abusing their role or not carrying out their duties. This type of accusation can lead to a power struggle between the beneficiaries and the trustee. Nonetheless, the trust document is always the final authority, and as long as the trustee is acting within their powers under the document, the trustee will often prevail if there is a dispute.

Get Help With Trusts in Florida and Texas

If you or a loved one needs help with creating a trust or understanding the role of a trustee, consider contacting the estate planning attorneys at Fleurinord Law, PLLC. Call 888-904-2297 for more information or to set up an appointment.