A trustee is a person or entity who administers a trust for the benefit of a beneficiary according to the instructions established by the trust maker in the trust document. A trustee should be patient, organized, detail oriented, honest and have the ability to make unbiased decisions with regard to the trust beneficiaries.
Every trustee has the following duties:
1. Duty to Administer the Trust based on the Trust Documents – the trust is your road map and you must follow its directions, whether about when and how to distribute income and principal or what reports you need to make to beneficiaries.
2. Duty of Loyalty to all the Trust Beneficiaries – you have a fiduciary duty to the trust beneficiaries including the current beneficiaries as well as any future or contingent beneficiaries to safeguard and preserve trust property and keep the beneficiaries informed.
3. Duty to Keep and Render Accounts – to keep track of all income to, distributions from, and expenditures by the trust. Generally, you must give an account of this information to the beneficiaries on an annual basis. In strict trust accounting, you must keep track of and report on principal and income separately.
4. Duty to Exercise Reasonable Care especially regarding investment standards – your investments must be prudent, meaning that you cannot place money in speculative or risky investments. In addition, your investments must take into account the interests of both current and future beneficiaries.
5. Duty to Enforce Claims of the Trust and Defend Actions Against the Trust – you would be responsible for hiring legal counsel.
6. Duty to Keep Trust Property Separate from your own Assets – you should have a separate trust bank account using the trust Employer identification Number (EIN) since the trust is a separate entity from the trustee and beneficiaries.
7. Duty Not to Delegate your Responsibility as a Trustee – however if you feel you can no longer serve as trustee you should resign after an alternate trustee is appointed.
As you can see from all the duties listed above being a trustee is an awesome responsibility. The trustee has full legal responsibility and legal liability for trust administration, filing the trust annual federal and state income tax returns, and making distributions in compliance with the trust documents. Therefore it is very important to select a professional trustee that has the experience and resources to handle all the details and duties listed above. Feel free to contact Gregory J. Spadea at Spadea & Associates, LLC in Ridley Park, PA at 610-521-0604 to see how he can help you fulfill your responsibilities as Trustee or act as a co-trustee with you.