Have you been named trustee or successor trustee for someone’s trust? Do you know your responsibilities as a trustee? Initially, you act only when the person, called the grantor, is unable to manage their financial affairs.
What You Need to Do Now
- Make sure appropriate titles and beneficiary designations have been changed for the trust. Some assets, like annuities and IRAs, may list the trust as a contingent beneficiary.
- Learn whether you will be acting alone or with someone else and the order in which you are required to act. Sometimes, two or more adult children are named to act together, or there may be a corporate trustee, such as a bank or trust company.
- You will be in charge of safeguarding assets for the grantor while they are living, and then for the beneficiaries upon death. Here are some guidelines:
- You cannot mix trust assets with your own. You must keep separate checking accounts and investments.
- You cannot use trust assets for your own benefit unless the trust authorizes it.
- You must treat all trust beneficiaries the same without favoring one over another unless it is specified in the trust.
- You need to invest the trust assets in a prudent manner that will result in reasonable growth with minimum risk.
- You are responsible for keeping accurate records, filing tax returns, and reporting to the beneficiaries as the trust requires.
When Your Friend or Relative Cannot Handle Their Financial Affairs
- You can intervene as trustee and manage financial affairs without court interference, ensure quality care in a supportive environment is being given, and verify the physician has all the health-care documents.
- You should review the trust and your responsibilities, and get the attorney to prepare a certificate of trust that proves you have legal authority to act.
- You need to become familiar with the grantor’s insurance to understand benefits and limitations to see whether it will cover any procedures or facilities. Request the doctor document the incapacity and let banks see the certificate of trust before you transact business.
- If there are minors or other dependents, you will look after their care. A guardian may need to be appointed by the court. This is where you should request assistance from the attorney.
- You need to know where the income that you are now in charge of comes from, how much it is and when it is paid, and about regular, ongoing expenses. You may need to create a budget.
- Keep careful records, and file medical claims promptly. Keep a ledger of bills and income received.
Most importantly, you do not need to go through all this alone. You should seek professional advice before beginning your trustee duties. Steve Buel and Jerry Miles can help with questions and guidance.