A trust is a legal arrangement where one person or an institution like a bank or law firm called a trustee holds legal title to…

Try: A trust is a legal arrangement where one person or an institution like a bank or law firm called a trustee holds legal title to property for another person called a beneficiary if you have been appointed the trustee of a trust there are several responsibilities to keep in mind fiduciary responsibility as a trustee you are held to a very high standard meaning that you must pay even more attention to the trust investments and disbursements than you would for your own accounts carefully read the trust both now and when any questions come up you must follow the trust’s directions about when and how to distribute income and principal or what reports you need to make to beneficiaries your investment decisions should be prudent meaning that you cannot place money in risky investments in addition your investments must take into account the interests of both current and future beneficiaries for instance you may have a current beneficiary who is entitled to income from the trust he or she would be best off in most cases if you invested the trust funds to generate as much income as possible however this may be detrimental to the interest of later beneficiaries who would be happiest if you invested for growth in addition to balancing the interests of the various beneficiaries you must consider their future financial needs does a trust beneficiary anticipate buying a house or going to school will she be depending on the trust income for retirement in 15 years all of these questions need to be considered in determining an investment plan for the trust only then can you start considering the pros and cons of individual investments where you have a choice on whether or not to make distributions to a beneficiary you need to evaluate his current needs his future needs his other sources of income and your responsibilities to other beneficiaries before making a decision and all of these considerations must be made with the size of the trust in mind often the most important role of a trustee is the ability to say no and set limits on the use of the trust assets one of your jobs as trustee is to keep track of all income to distributions from and expenses by the trust in most cases you must give an account of this information to the beneficiaries every year check the terms of the trust to be sure depending on the type of trust the trustee may have to file a tax return and pay any taxes related to the trust to make things easier keep good accounting records and ask a trusted accountant to prepare the tax returns for you depending on the type and size of the trust it may be helpful to get help from professionals such as accountants lawyers and bookkeepers to help manage your job as a trustee you can’t pass on the responsibility as trustee to someone else but you can hire others to advise you and help maintain the financial records just make sure that you maintain good communication with those that you hire trustees are entitled to reasonable fees for their services banks trust companies and law firms typically charge a percentage of the funds under management others may charge for their time in general what what’s reasonable depends on the work involved the amount of funds in the trust other expenses paid out by the trust the professional experience of the trustee and the overall expenses for administering the trust in any case it makes sense to consult with a professional experienced with trust work who can guide you on what would be a reasonable fee information references "a brief overview of a trustee trustee’s duties" 2008 available at

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Categories: Sage, Topic, Financial, Legal

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Keywords: Trusts finance trustee

*This information is listed as a Fact Sheet and is not explicitly medically licensed

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