Aging Options

Do's and Don't After Being Appointed as a Trustee

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Whether it’s an honor or a burden (or both), you have been appointed trustee of a trust. What responsibilities have been thrust upon you? How can you successfully carry them out?

Here are nine do’s and one don’t to get you started:

  • Do read the trust document. It sets out the rules under which you will operate, so you need to understand it completely.
  • Do create a checking account for the trust. All income and expenses should go through this account. While you can and should invest the money, a checking account will enable you to make distributions and payments and keep track of them.
  • Do keep the best interests of the beneficiaries in mind at all times. You have what’s called a “fiduciarry” duty to them, which is an extremely high standard.
  • Don’t have any personal financial dealings with the trust. For instance, you cannot borrow money from the trust or lend the trust money to anyone.
  • Do provide the beneficiaries and anyone else indicated in the trust with an annual account of trust activity. This can be a copy of the checking and investment account statements or a more formal trust account prepared by an accountant or attorney.
  • Do invest the trust funds prudently and productively. You cannot simply leave the trust funds in a savings account. And you can’t put them all into a promising new company. You need to diversify the trust portfolio among stocks and fixed income securities. It is wise to get professional investment advice.
  • Do keep in regular contact with the beneficiaries to understand their needs.
  • Do be aware of any public benefits the beneficiaries may be receiving and make sure you do not jeopardize the beneficiaries’ eligibility.
  • Do file annual income tax returns for the trust.
  • Don’t fly solo. Get professional advice to make sure you are correctly fulfilling your role.

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