The Basics of Being a Trustee
May 28, 2020 | Freya Allen Shoffner, Esquire | Main Office

The Basics of Being a Trustee

It is an honor to be appointed as a trustee for a trust. It is also a big responsibility. There are basic guidelines to follow to being successful.

The first thing you should do is to read the trust document. The trust document contains the rules under which you will serve as trustee. You need to have a thorough understanding of it. Review it with your lawyer for clarification.

You have a fiduciary obligation to the beneficiaries. Always keep in mind the best interests of the beneficiaries. That is your primary job.

You may not have any personal financial transactions with the trust. Do not borrow money from the trust or make loans to anyone from the trust.

Open a checking account for the trust. This will allow you to track all distributions and payments. Have all income and expenses go through this account.

Provide an annual accounting of trust activity to the beneficiaries and any other required parties. This accounting can be bank or investment account statements or a more formal document created by an accountant or lawyer.

You must invest the trust funds wisely and productively. Diversify the trust funds across stocks and fixed income securities. Consult with a professional investment advisor.

Know your beneficiaries. Make sure you understand their goals and needs. This is vital to being a successful trustee.

You need to submit annual income tax returns for the trust.

Consult with your attorney and financial advisor to ensure that you are properly satisfying your role as trustee.

Being a trustee is an important job. You are very likely fulfilling the request of a dear friend or relative. The beneficiaries are certainly dependent on your thoroughness and expertise. Contact Shoffner & Associates with any questions or concerns you have.

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