Tips for First-Time Trustees

Being appointed as a trustee is an honor, but it also comes with significant responsibilities that may catch those unfamiliar with the process off-guard. The process often seems complex at first, especially because trustees have a fiduciary duty to manage and protect the assets of a trust while balancing the expectations of the beneficiaries. However, with the right guidance and preparation, even first-time trustees can successfully perform their duties.  

Tips for First-Time Trustees

Understanding Your Duties and Responsibilities

Each trust will be unique and have specific parameters that must be followed. For example, a trust may constitute a substantial amount of money only to be distributed to beneficiaries after a triggering event or time period, like reaching adulthood or the birth of a child. That being said, there are certain duties that are universal regarding trust administration. Some of these duties are as follows:

Fiduciary Duty: As a fiduciary, your primary duty is to act in the best interest of the beneficiaries and the trust. This means that you will manage the assets of the trust, distribute assets as required in a timely manner, and maintain transparency in all financial matters. 

Record Keeping: The trustee must maintain extensive and accurate records throughout the life of the trust. Beneficiaries should have access to detailed financial records, transactions, and any additional matters related to the trust’s administration.

Communication: Extensive record keeping is required as a fiduciary, but it also establishes transparent communication. The beneficiaries should be made aware of all trust matters, and the trustee should be able to answer any questions they have. Keeping an open line of communication and clarity in documentation can protect trustees from potential liability and accusations of mismanagement.

Preparing for Trustee Obligations

Serving as a trustee can be an extremely rewarding experience for those who are fully prepared. It’s not necessarily an indicator of success if the trust document is difficult to interpret. In these circumstances, trustees should seek professional guidance from experienced estate planning professionals. It may also be advisable to reach out to financial and tax advisors to ensure compliance with applicable regulations and assist with making well-informed decisions regarding the trust. 

For those who wish to establish a trust, it’s important to consider the complexity of the trust when selecting a trustee. A trustee should not only be responsible and well-organized but resourceful and pragmatic. Many people choose to name their accountant or attorney as a trustee for their professional expertise. While creating your estate plan, your attorney will work closely to help you as you consider your options. 

Moving Forward

If you’re selected as a trustee, it means that the grantor considers you a trustworthy and responsible person. However, if you feel you can’t dedicate the appropriate amount of mental energy and time commitment, it may be best to decline your appointment. Failing to fulfill your obligations as a trustee could put you in breach of fiduciary duty and result in legal action and personal liability. 

Becoming a first-time trustee can be both challenging and rewarding. By understanding your duties, fulfilling your responsibilities, and seeking professional guidance, you can effectively manage the trust and safeguard the beneficiaries’ interests. At Ledwidge & Associates, we help people create trusts that safeguard assets and provide knowledgeable guidance in all things regarding trust administration. If you have questions about estate planning, or your responsibilities as a new trustee, call our office at 718-276-6656 for a free consultation.

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Tips for First-Time Trustees

Ledwidge & Associates

Ledwidge & Associates, P.C. in New York City has years of experience helping clients create estate plans that fit their needs. We have the experience and resources to handle your critical legal matters with the utmost care and attention to detail.
Tips for First-Time Trustees

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