What Does a Trustee Do?

What is a Trustee?

When considering “who is the trustee of a trust,” think of a person, usually a family member, lawyer, or accountant, who manages the grantor’s wishes for the benefit of a third party. There are different types of trustees, with the most common being the successor trustee, responsible for handling assets and property within the trust if the grantor becomes incapacitated or passes away.

Duties & Responsibilities of a Trustee

Trustee responsibilities are unique to a specific trust agreement and dictated by the property types in the trust. Trustees can also file tax returns for the trust and distribute assets according to the trust’s instructions. A trustee must be 18 years or older, not at risk of bankruptcy, and mentally competent.

The grantor can serve as a trustee in a revocable living trust, but must name someone else as a trustee in an irrevocable trust. The trust can be modified as long as the grantor is alive.

Fiduciary Duty

The fiduciary duty of a trustee includes preserving and protecting the assets of the trust, managing assets with care, and avoiding co-mingling of assets.

Property & Asset Management

Trustees may oversee bank accounts, pay bills, file tax returns, and manage other financial responsibilities as per the trust’s guidelines.

Distribution, Delegation, and Record Keeping

A trustee manages asset distribution, cannot delegate their duties but may delegate specific tasks, and must maintain impeccable records of all transactions and activities related to the trust.

Who Is a Grantor?

The grantor is the person or entity that establishes a trust. In a revocable trust, the grantor has the flexibility to add or change beneficiaries, manage income, and retain administrative rights.

Grantor Vs. Trustee: What’s the Difference?

Understanding the difference between the grantor and the trustee is crucial in estate planning. The roles they play, their powers, and responsibilities vary significantly. Here’s a closer look:

The Grantor Establishes and Finances the Trust

The grantor is responsible for creating the trust, defining its terms, and funding it with assets. They decide on the trust’s purpose, assets, and beneficiaries. The grantor can also serve as the trustee in a revocable trust, giving them control over trust management and the flexibility to alter it.

The Trustee Runs the Trust for the Beneficiary’s Advantage

The trustee is responsible for managing the trust in the best interests of the beneficiaries. This includes making decisions about the trust’s assets and ensuring the trust’s terms are followed. The trustee can be the grantor in some cases, but in others, a separate individual is appointed.

Successor Trustee

A successor trustee takes over the trust’s management if the initial trustee dies, becomes incapacitated, or steps down. This role is vital for ensuring continuity in trust management.

Related Questions

Does a Trustee Get Paid? Yes, trustees are compensated for their duties, usually from the trust’s assets.

Difference Between Trustee and Beneficiary? A trustee manages the trust, while a beneficiary benefits from it. The trustee ensures the trust’s assets are handled and distributed according to the trust’s terms for the benefit of the beneficiaries.

Conclusion

In summary, a trustee administers the trust for the benefit of the beneficiaries, while the grantor establishes and sometimes manages the trust. Understanding these roles is essential in estate planning.