Do You Know Your Trustee Duties?

You may have been asked to be a trustee for a trust, but do you know what your duties entail? It’s important to know your trustee duties and responsibilities as listed below:

  • Managing the trust
  • Safeguarding assets
  • Making distributions
  • Accounting
  • Paying taxes and fees
  • Keeping the beneficiaries informed

A trustee must manage and administer the trust. This means you have a fiduciary responsibility to the beneficiaries of the trust. It is very important that you read and fully understand the trust agreement. Consider having a discussion with your attorney or accountant about trustee responsibilities.

You are acting on behalf of the trust to make sure the beneficiaries are receiving the intended distributions. It is important that all the income, expenses, and distributions are tracked. Speak with us to make sure that you have distributed income as applicable, and if appropriate within 65 days of the trust year end. Typically the trust document will indicate when, and how, principal payments are to be made to beneficiaries. Depending on the type of trust you may have to file a tax return for it.

As a trustee it is one of your responsibilities to safeguard the trust assets. Many trusts have securities and other investments. To assist you in managing wisely and minimizing risks, you may use an investment advisor to fulfill this responsibility.

Trustees have both affirmative notification responsibilities to beneficiaries as well as providing prompt response to a beneficiary’s request for information. While it is not a requirement for the IRS or most states, Maryland has recently passed the Maryland Trust Act (MTA) outlining notification responsibilities. You can read more about the MTA Trustee Alert below.

Being a trustee can be more of a task than most expect. Trustees should be paid reasonably for their services, but some do decline payment if they are a family member. Thoroughly understanding your duties and responsibilities as a trustee will assist in managing beneficiary expectations and minimizing the chance of legal actions.

If you have any questions or would like more information on how Snyder Cohn, PC can help you manage and understand your trust, please feel free to contact Kyle Wolfer via Email or by calling 301-652-6700.