Trusts are just one way that people plan out their finances responsibly after death. As a trustee, it’s your duty to fulfill the responsibilities you bear in this role. People who create trusts depend on you to follow through and ensure their finances are handled and their loved ones are compensated. However, there are several factors that can complicate your management of a trust account.
Forgetting Your Responsibility as a Trustee
A trustee is the person who manages the affairs of a trust. The main responsibilities of a trustee include settling the deceased’s debts, paying remaining taxes, and paying beneficiaries. You can also make investments if it is in the interest of the beneficiaries involved. Forgetting or not fully understanding your role can backfire on you, because trustees may be held liable for trust mismanagement. It can be easy for a trustee to get into hot water if they don’t know what their duties are, so ensure you understand from the get-go.
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Being an Untrustworthy Trustee
A person close to you chose to impart this hefty responsibility to you because they knew they could trust your abilities. As a trustee, you must be committed to stepping up to the plate and fulfilling your role. Communicate with beneficiaries about your actions, and keep a log of what you’re doing for transparency. It can be difficult dealing with another person’s finances and the beneficiaries. However, you must be capable of handling pressure, have a good head on your shoulders, and do what’s in the best interest of the trustor’s wishes and the beneficiaries.
Related Article: The Duties of a Trustee
Failing to Keep Accurate Records
Trusts should be kept in order and managed with a keen eye, because one slip up can cause problems down the line. As soon as you start managing a trust, do your best to settle and pay off debts before paying out beneficiaries. It’s critical to keep an accurate record of accounts in order to avoid the mismanagement of funds. Staying on top of records as a trustee will benefit you yearly because in the state of California, trusts must undergo a trust accounting each year. Failing to maintain accurate records is another mistake that trustees can avoid.
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As the most experienced CPA in the Inland Empire who specializes in working with seniors, Marcia L. Campbell is committed to helping each client thrive by caring for their personal and financial wellbeing with genuine interest, well-established expertise, and a focus on respectful partnerships. Marcia’s team specializes in a number of services including elder & financial care, court & trust accountings as well as private fiduciary and tax services. At Marcia L. Campbell, CPA, we understand the importance of our clients’ individual needs and are committed to helping them make the best personal and financial decisions for their future.