If you have been asked to serve as a trustee, chances are you were initially flattered by the request. After all, it is quite an honor—a parent or loved one thinks highly enough of you to entrust you with managing a significant portion of their life’s savings. However, before agreeing to serve as trustee, it’s important to consider the responsibilities involved. Administering a trust typically involves the following duties—and often more:
- Locating and protecting trust assets
- Collecting life insurance policies, annuities, and retirement accounts that name the trust as the primary beneficiary
- Coordinating settlement of the estate with the personal representative if probate administration is necessary
- Obtaining the values of all trust assets at the time of the trustmaker’s death, including real estate and business interests
- Ascertaining and paying off all of the trustmaker’s debts from funds remaining in the estate
- Assessing income and estate tax liabilities
- Preparing and filing all required income and estate tax returns
- Paying the ongoing expenses of administering the trust until it can be terminated and distributed to beneficiaries
- Raising the cash necessary to pay off debts, ongoing expenses of administration, and estate and income taxes
- Investing and managing trust assets until they can be distributed to beneficiaries
- Distributing all assets left in the trust after all debts, taxes, and expenses have been paid
Accomplishing these tasks can be both time-consuming and, in many cases, extremely complicated. The first question to ask yourself is whether you have the time and skills necessary to administer the trust. Another important factor is that a trustee can be held personally and financially responsible for failing to carry out the mandates of the trust exactly as stated. Even inadvertent mistakes can result in severe penalties.
Given these challenges, the decision to serve as trustee should not be taken lightly. If you are considering whether to accept the role of trustee, Axis Estate Planning can help you understand the responsibilities and risks involved. Should you decide to serve, we can guide you through every stage of the process. If you prefer not to accept this responsibility, we can help you choose the ideal person to serve in your place.
Call us at (248) 920-9398 or visit www.axisattorneys.com to schedule a consultation today.
