What Exactly Does a Trustee Do?

One of the questions on everyone’s mind as they begin to explore estate planning and trusts is, “What exactly does a trustee do?” After all, depending on what the responsibilities of a trustee are, you may decide one person is more suitable for the job than another.

To bring clarity to your estate planning experience and help you identify the best candidate for a trustee; should you realize you need one, we’re going to let you in on some of their primary responsibilities and what they require.

Keep track of the trust assets, distributions, and expenditures.
One of the more tedious but incredibly important tasks assigned to trustees is keeping track of all the trust assets, any distributions that are made, and any approved expenditures. Many times a trust will require that the beneficiaries are periodically updated on the status of the assets as well as any ongoing expenses and investment outcomes. For this reason; and in the best interest of the trust, a trustee must be detailed and accurate in their asset management.

Remain Neutral and Unbiased in Dealing with Beneficiaries
A trustee must remain neutral and unbiased in their interactions with beneficiaries – they cannot favor one over another, unless the trust explicitly says they can. It’s not uncommon for a successor trustee to also be a beneficiary, which is one of the reasons it’s important to make sure the person you choose can manage the trust diplomatically and without favoritism or selfishness.

Protect and Grow Trust Property
The trustee has the somewhat precarious job of managing assets in the trust in such a way that they are reasonably safe from loss – but also lucrative. A trustee can’t just park the funds in a non-interest bearing account because they don’t want to deal with actually managing the assets or consulting a professional.

Diversify Any Investment Holdings
It’s not expected that a trustee is an investing expert, but they are expected to consult professionals; like financial advisors, when necessary. Some trusts even name preferred advisors. One of the offshoots of protecting and growing the property in the trust is the idea that a trustee will also pay attention to diversification and leverage it to make the best use of the assets as well as to shelter them from potential losses.

Be Honest and Accountable
Trustees are working to protect property in a trust and see to it that the grantors wishes are honored according to the trust documents. Additionally, they have a duty to communicate with beneficiaries and manage assets as lucratively and wisely as possible.

Because the job of a trustee is really based on honesty and accountability, it’s important to choose someone who will live up to the primary duties of the trust and honor your wishes and beneficiaries with loyalty and care.

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