Becoming a trustee is a big responsibility, which is why we want to make sure that if you are taking on this role that you are prepared. To help you get more prepared, check out some of the most common questions that most trustees ask Marcia Campbell.
If you have any additional questions, don’t hesitate to contact us by filling out the contact form on our website.
6 FAQs Trustees Ask Marcia Campbell
1. What should I do as a trustee?
As a trustee, there are several important roles you are responsible for. Decker & Woods provided a comprehensive overview of the main things trustees do:
- Follow the instructions in the trust document.
- Ensure checking accounts and investments remain separate.
- Avoid mixing trust assets with your own or using trust assets for your own benefit (unless the trust authorizes it).
- Treat trust beneficiaries the same; you cannot favor one over another (unless the trust says you can).
- Invest trust assets conservatively in order to get reasonable growth with minimum risk.
- Keep accurate records, filing tax returns, and reporting to the beneficiaries as the trust requires.
Related Article: Who Should Be Your Trustee?
2. Do I have to do all of this by myself?
No, you don’t have to. You can have professionals help you, especially with the accounting and investing. You may also need to consult with an attorney from time to time. However, as a trustee, you are primarily responsible for managing the trust assets for the beneficiaries.
3. Do I get paid to be a trustee?
Family members and friends usually serve as trustees without compensation. However, if the duties are especially demanding, it would be nice if you were given compensation for your efforts, though it is not required.
On average, professionals usually charge an annual fee of 1 percent of assets in the trust and usually charge a higher percentage of smaller trusts and a lower percentage of larger trusts. If you are doing all of the work for a trust such as investments, distributions, and accounting, it would make sense to charge a similar fee. However, if you are paying others to perform these functions or are acting as co-trustee with a professional trustee, the fee structure would change. Take the time to read what the trust says regarding trustee compensation and discuss the issue with the grantor if you have concerns.
Related Article: Benefits of a Professional Trustee
4. What do I do if the grantor is incapacitated?
If all the assets have been transferred to the trust, you will be able to manage the grantor’s financial affairs quickly and easily, with no court interference.
5. What do I do if the grantor passes away?
If the grantor passes away, you will have similar duties as an executor named in a will would have. The trustee is responsible for seeing that everything is done properly and in a timely manner.
Here are the steps you need to take according to Estate Planning.com:
- Inform the family of your position and offer to assist with the funeral.
- Read the trust document and look for specific instructions.
- Notify a co-trustee of the incident as soon as possible to get the process going.
- Make an appointment with an attorney to go over the trust document, trust assets, and your responsibilities as soon as possible.
- Make a preliminary list of the assets and their estimated values, and inform the attorney if an estate tax return will need to be filed (due no later than nine months after the grantor’s death).
- Collect all death benefits (social security, life insurance, retirement plans, associations) and put them in an interest-bearing account until assets are distributed.
- Notify the bank, brokerage firm, and others of the grantor’s death and that you are the trustee. Make sure to bring a certified death certificate, a certificate of trust, and your personal identification.
- To finalize the list of assets, you will need exact values as of the date of the grantor’s death. Some assets will need to be appraised. An estate sale may need to be held to dispose of household goods and personal effects.
- Keep careful records of final medical and funeral expenses, and file medical claims promptly. Keep a ledger of bills and income received.
- Contact an accountant and attorney to prepare final income and estate tax returns, if required.
- Verify and pay all bills and taxes.
- Make a final accounting of assets and bills paid, and give it to the beneficiaries.
- Divide the cash and transfer titles according to the instructions in the trust.
Once these steps are completed, the trust will be dissolved.
6. What if the responsibilities are too much for me?
If you feel as if the responsibilities are taking a toll on you, consider hiring an attorney, bookkeeper, accountant, or corporate trustee to help you. If you truly feel that you cannot handle the role, you can resign and let the next successor trustee step in. If no other successor trustee has taken the position, or no one is willing or able to serve, a corporate trustee may step in under certain circumstances.
Do you have more questions regarding your role as a trustee?
Feel free to contact us! Our team is always here to help our clients and make them feel comfortable when taking on new roles.
Please contact us by filling out a Contact Form or giving our office a call at +1(951)686-3608.