Did you recently learn that someone named you as the Trustee of a trust they created? If so, and you have never before served as a Trustee, the prospect of doing so may be a bit intimidating. In fact, you may not want the job. The North Andover trust attorneys at Legacy Care Law Firm discuss the ability to refuse the job of Trustee.
What Is a Trust?
A trust is a separate legal entity that owns and holds property for the benefit of one or more beneficiaries. A trust is created by a Settlor, also referred to as a Grantor, Trustor, or Maker, who transfers property to a Trustee appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, as the name implies, does activate during the Settlor’s lifetime.
What Does a Trustee Do?
In general, a Trustee is responsible for administering the trust. Some common things a Trustee might be required to do include:
- Understanding and abiding by the trust agreement. A “trust agreement” is the legal document created when a trust is established. The terms of the trust agreement govern the administration of the trust and must be followed by the Trustee as they are written unless a term is illegal, impossible, or unconscionable.
- Understanding applicable laws and financial concepts. While not legally require of a Trustee, having legal and/or financial experience is extremely beneficial to a Trustee. A Trustee must understand and abide by the laws that govern trust administration which much easier to do with a legal background. By the same token, a Trustee must manage and invest the trust assets which is easier to do well if the Trustee has a financial background.
- Recordkeeping. A trust is a separate legal entity. As such, the trust needs a separate bank account that will be used to pay trust expenses. The Trustee must keep detailed records of all trust business. In addition, the Trustee must pay the trust debts and keep track of debts owed to the trust.
- Communicating with the trust beneficiaries. Trust beneficiaries have several rights, including the right to be kept apprised of all important trust business. Often, this is the first time a beneficiary has been involved in a trust, meaning the beneficiaries may be feeling just as overwhelmed and uncertain as the Trustee. In this case, the Trustee’s job requires a bit of “hand holding.”
Refusing to Serve
If someone appointed you as the Trustee of a trust it means that they had considerable trust in you and confidence in your ability to successfully administer the trust. That does not mean, however, that you are required to accept the appointment. You can always decline to act as the Trustee. If the trust was properly drafted, the Settlor should have named an alternate Trustee who will take over once you decline to serve. A court can always appoint someone if a successor Trustee was not named in the trust agreement.
Contact North Andover Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions about serving as the Trustee of a trust, contactthe North Andover trust attorneys at Legacy Care Law Firms by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
A testamentary trust is a trust that does not activate until after the death of the Settlor.
A professional Trustee has the experience and skill to successfully administer your trust. In addition, you avoid potential conflicts of interest by appointing a professional Trustee instead of a friend or family member.
Absolutely. Even if you do not wish to accept the appointment you should still talk to a trust attorney to ensure that the proper steps are taken.
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