Dear trustee,
As a trustee, you have been entrusted with managing the assets of your loved one’s trust in accordance with its terms. With this title, you now have a fiduciary duty to act in the best interest of the beneficiaries by exercising care, skill, and prudence in managing and distributing the trust assets. We understand that this can feel overwhelming, so the Bequest Law team would like to offer our guidance in navigating your responsibilities.
This letter aims to outline the necessary steps to be taken in order to fulfill your duties as trustee. To effectively manage the trust, please refer to the following steps:
Step 1: Review the trust Documents
First, locate and read through the original trust agreement and any related documents in order to best understand its terms, conditions, and your responsibilities.
Remember to pay special attention to the provisions concerning trustee powers, distribution guidelines, and any specific instructions.
Step 2: Understanding the Trust
Second, talk to an advisor. These documents are full of legalese and are surely lengthy. Consulting with legal, financial, or tax professionals can assist you in managing the trust's assets, ensuring compliance with legal requirements, and optimizing financial performance. For example, their expertise can ensure timely filing of all required tax returns as well as payment of any taxes due. Even an hour of an advisor’s time can point you in the right direction.
Steps 3&4: Asset Management
Third, identify and take a comprehensive inventory of the assets in the trust. This may include bank accounts, real estate, investments, personal property, life insurance, etc.
Fourth, open a bank account in the name of the trust if one does not already exist. You may do this by first obtaining an EIN with the IRS. It is helpful to establish a separate bank account in the name of the trust to handle all related financial transactions. This will ensure clear and separate accounting for the trust's funds.
NOTE: There may already be a bank account set up in the name of the trust. In this scenario, you should take the certification of trust document and/or the full trust to the relevant bank to gain access to the account. The bank will use these documents to confirm your role as trustee and grant you access.
Step 5: Communicate with Beneficiaries
Once you have a grasp of the Trust’s assets, you should then inform all beneficiaries of your appointment as trustee, and provide them with your contact information, an overview of what distributions they can expect, and the process for management and distribution. It is best to maintain open and transparent communication with the beneficiaries, providing regular reports to the beneficiaries detailing the trust’s financial status, distributions made, etc.
Important Note: Record-Keeping
Throughout this process it is essential to implement a reliable record-keeping system that works best for you to track all trust-related activities, for example financial transactions and beneficiary communications.
Being a trustee is a significant responsibility that requires diligence, transparency, and a commitment to acting in the best interests of the beneficiaries. By following the steps outlined above, you can more effectively manage the trust and fulfill your role with assurance. The Bequest Law team is here to provide you with the guidance, support, and expertise you need to fulfill your duties as trustee and to ensure the utmost care and respect in honoring your loved one’s wishes.