You may spend a significant amount of time determining the best way to provide for your family members after you pass away. Figuring out the type of plan that provides the most benefit possible from your assets may require some significant thought.
You decide that your estate plan will include a trust. It could be a (revocable or irrevocable) living trust, a South Dakota special spousal trust or a decanting trust, among others, that may suit your needs. Regardless of the type of trust you choose, it will need a trustee. Deciding who should care for your family’s future may be the most difficult and thought provoking part of the whole process.
What duties does a trustee perform?
First, you can choose any number of people or entities to serve as your trustee. That means that your spouse, your attorney or your bank may be able to act as the fiduciary for the beneficiary or beneficiaries of your trust. It may be difficult to exaggerate the importance of this duty of care. In fulfilling the fiduciary duties as trustee, the following need to occur:
- The trust’s provisions need to be read and understood.
- Avoid investments that could jeopardize the assets of the trust.
- Evaluate responsibilities to all beneficiaries, other sources of income and future needs before making distributions.
- Review trust provisions regarding distributions when consider a request from a beneficiary.
- Keep accurate records of income, expenses and distributions from the trust.
- Delegate certain tasks associated with managing the trust to appropriate parties.
The chosen trustee does not necessarily need to know how to perform the required tasks since it’s permissible to hire accountants, tax preparers and attorneys as needed in order to fulfil the trustee’s duties. In addition, the trustee may receive a fee from the trust for the services provided. This does include a family member if you choose one to be your trustee.
After you make your choice
Once you make the choice, you may want to discuss the particulars with the individual or entity. If you do choose a person who does not administer trusts for a living, you may need to clearly outline what’s required first. He or she may be tempted to accept the job as an honor or out of obligation, but if that person really does not want to handle the necessary tasks or take on the legal responsibilities of being a trustee, someone else may be a better fit.