Trustee(s) Duties

Are you creating a Special Needs plan for a loved one and find yourself trying to determine if you should name a family member as the trustee or if you should use a professional corporate fiduciary as the trustee?  It is not an easy decision.  You will usually find peace of mind knowing a family member is involved.  However, before you make that determination, you should consider some of the duties your trustee(s) might expect to perform.  Here is a summary outlining the types of duties likely to come up:

  • File a Trust Registration Statement in the County of your residence.
  • Obtain a Federal Employer’s Tax ID Number for the trust.
  • Take custody of securities, bank accounts and other personal property.
  • Establish a trust bank account.
  • Collect life insurance and other benefits payable to the trust.
  • Collect and pay debts.
  • File claims for social security and other benefits.
  • Safeguard, manage and insure all trust property and business interests.
  • Arrange for appraisals when necessary.
  • Make decisions on selling assets.
  • File a descendant’s final income tax return(s).
  • File a Federal Estate Tax return.
  • Pay any federal estate taxes due from the estate.
  • File an income tax return for the trust.
  • Make a final accounting to your beneficiaries.
  • Distribute the assets to the rightful beneficiaries and/or continue to manage the assets that remain in the trust.

Please note that it is not expected that your family member will know exactly what to do by reading this simple list.  A trustee is held to the highest responsibility of a fiduciary and must be prepared to accept that role.  In many cases, it is wise to consider a corporate fiduciary as the trustee and place the family member in the role of a trust protector1.  This keeps the family member involved; however, it places the fiduciary responsibility onto the shoulders of a professional trustee.  It is recommended that you seek the counsel of a qualified trust attorney, CPA or CFP before making your making your determination on a trustee or before acting as a trustee yourself.

Please contact a Golden Financial Services Advisor today to help you tackle some of these complex planning issues.

1 A Trust Protector is usually a person close to the family (possibly the family’s accountant or attorney) that has certain powers derived from the trust document.  These powers may include, but are not limited to, the ability to remove or replace the Trustee, to change the Trust situs, to resolve conflicts among co-trustees, to control spending or limit (or even veto) distributions, to veto investment decisions, and possibly to terminate the Trust.   Again, your specific trust document will describe the precise authority you wish to grant a Trust Protector and may include one or several of these powers.

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