Trustee Duties

A trust is a device for the management of property where one person, the grantor (sometimes called the settler, trustor or trust maker), transfers property to another person (or a bank or trust company), the trustee, for the benefit of the trust beneficiary.

A trust exists when a grantor transfers the legal title to the trustee who is to hold that title for the benefit of the beneficiary (the beneficial owner). The trustee is responsible for carrying out the instructions of the grantor as set forth in the trust agreement.

The Trustee is responsible for the marshaling and safekeeping of trust assets. The successor trustee is responsible for being sure the predecessor trustee has delivered all trust assets to him or her.

When assets are received, the trustee should be sure they are properly secured and are identified as belonging to the trust. For example, in the case of cash or securities, the trustee should establish a bank or brokerage account in the name of the trust. The trust can be identified in any number of ways, but the following example is typical:

John Doe, Trustee or any Successor Trustee, of the John Doe Irrevocable Trust dated December 5, 2020. You may find that a particular insurance company, bank or other financial institution may require slightly different wording, but as long as the trust is clearly identified by the following three key parameters: (1) name of trustee, (2) name of trust, and (3) date of execution of the trust, such slight variations should cause no concern.

When opening an account at a bank trustees should be aware that bank personnel sometimes get confused when you seek to establish an account for a trust. Remember… You are not asking the bank to create what is often known as a “trust account.” That is, the account itself does not create a trustee/beneficiary relationship. Rather, you are asking the bank to make a trust is the owner of an account. Certain trusts require a tax identification number.

Investment of Trust Assets: The trustee must review trust investments immediately upon receipt and continually thereafter. If the trust permits, the trustee may delegate investment management to a professional investment adviser… but the trustee must regularly review the professional’s actions.

Understand the Terms of the Trust: The trustee should review the trust instrument with a competent Trust & Estate attorney to familiarize himself with the document as soon as possible.

Get to Know the Beneficiaries: The trustee must fully understand the circumstances and needs of the beneficiaries. Trusts often have multiple beneficiaries. The trustee must be fair to all of them.

Trust Administration and Record Keeping: The trustee is responsible for administering the trust accurately and skillfully. Generally speaking, all beneficiaries of the trust are entitled to a complete review of all trust transactions. Thus, accurate and thorough record keeping is essential. Trust records should be kept in a secure place. Even after the trust terminates, trust records should be archived and kept for many years thereafter.