The Responsibilities of Trustees

Being named a trustee is a serious responsibility. Whether you’ve just been appointed or simply want to understand what the role involves, knowing trustees’ duties and responsibilities will help you serve beneficiaries with confidence. The Bakerink, McCusker & Belden team in Tracy, CA, can explain your legal obligations and help you navigate the trust administration process.

What Is a Trustee?

A trustee is the person – or institution – responsible for managing a trust on behalf of its beneficiaries. When someone creates a trust, they appoint a trustee to carry out their wishes as set out in the trust document. Trustees can be individuals, such as a family member or close friend, or professional entities like a bank or trust company. Either way, the role comes with clear legal duties that must be followed carefully.

Core Trustee Responsibilities

The responsibilities of trustees are broad, with key duties including:

• Managing Trust Assets – Trustees are responsible for overseeing and managing all property held in the trust. The goal is to preserve and grow the trust’s investments and other assets for its beneficiaries.
• Acting in the Best Interests of Beneficiaries – Trustees have a fiduciary duty to act in the best interests of the beneficiaries, not themselves. This is one of the most important trust responsibilities a trustee carries.
• Following the Terms of the Trust – The trust document is the trustee’s primary guide. Trustees must distribute assets, make decisions, and manage property strictly in accordance with the document.
• Keeping Accurate Records – Trustees must maintain detailed records of all transactions, income, expenses, and distributions. Beneficiaries or the court may require these records at any time.
• Communicating With Beneficiaries – Trustees are generally required to keep beneficiaries informed about the trust’s administration. They must also respond to reasonable requests for information.
• Filing Taxes – Trusts are separate legal entities that may need to file their own tax returns. Trustees are responsible for ensuring all tax obligations are met on time.

Additional Duties Often Required of Trustees

Beyond the core duties, trustees may also be required to handle a range of other tasks, depending on the type and complexity of the trust:

• Resolving Disputes – When beneficiaries disagree about how the trust is being managed, the trustee may need to mediate or seek legal counsel to resolve the matter.
• Distributing Assets According to the Trust Schedule – Some trusts distribute assets at specific times or when certain conditions are met, such as when a beneficiary reaches a certain age. Trustees must track and properly carry out these distributions.
• Managing Real Estate or Business Interests – If the trust holds property or a business, the trustee may be responsible for collecting rent, managing tenants, overseeing operations, or deciding whether to sell.
• Working With Professionals – Trustees often coordinate with attorneys, accountants, and financial advisors to properly carry out their responsibilities as executors of a trust. Seeking outside expertise is often expected.

When Trustees Should Seek Legal Guidance

Trustee duties and responsibilities can become complicated when the trust holds significant assets, involves multiple beneficiaries, or spans many years. Consider speaking with an attorney if:

• The Trust Document Is Unclear – If the language in the trust is ambiguous or contradictory, a lawyer can help you interpret it correctly.
• Beneficiaries Are Disputing Your Decisions – Legal counsel can help you document your actions and protect yourself from liability.
• Tax Questions Arise – Trust taxation can be complex. An attorney working alongside a CPA can help ensure compliance.
• You’re Unsure About a Distribution – When in doubt, it’s always better to seek guidance before acting.

FAQ About Trustee Responsibilities

What Are the Responsibilities of Trustees of a Will?

While trust wills are managed by executors, trusts are managed by trustees. If a will creates a trust, the trustee becomes responsible for managing the assets in accordance with the trust’s terms once the estate is settled.

Can a Trustee Be Held Personally Liable?

Trustees who mismanage trust assets or breach their fiduciary duty can be held personally liable, so careful record-keeping and legal guidance are essential.

Can a Trustee Also Be a Beneficiary?

Yes, in many cases. However, a trustee who is also a beneficiary must still act impartially and in the best interests of all beneficiaries.

How Long Does a Trustee Serve?

A trustee serves until the trust is fully distributed, they resign, or they’re removed. Some trusts last for decades, especially those created for minor children.

What Happens If a Trustee Wants to Resign?

A trustee can resign, but they must typically follow the process outlined in the trust document or state law. A successor trustee will then take over.

Contact Bakerink, McCusker & Belden in Tracy, CA

Understanding your trustee duties and responsibilities is the first step toward fulfilling the role. If you’ve been named a trustee, the experienced attorneys at Bakerink, McCusker & Belden can help guide you. Contact us today to schedule a consultation.