Before accepting the role of a trustee, it is important to have a thorough understanding of what you will need to do and for how long. Trustees are often appointed to manage trust assets for a child or adult with special needs. This responsibility could be for a lifetime, so be sure that you are up for the task. We took these 10 trustee responsibilities from a InsuranceNewsNet.com article. When the person who created the trust passes away, the trustee is in charge of settling the trust. Here are 10 steps the trustee takes when settling the trust.
- Locate and review grantor documents, focus especially on any funeral and burial instructions
- Change the locks on the grantor’s house. If the grantor owned a home or an apartment, keeping hte house secure will prevent any of their possessions from “walking away.” Also, notify the homeowner’s insurance company if the house will be unoccupied for an extended period of time. Finally, check on auto insurance policies if there are cars or other vehicles.
- Obtain multiple death certificates. Unless the executor is taking care of this task, it’s your job to do order them from the funeral director. We recommend getting 8-10 of them.
- List all assets with the Date of Death (DOD) values. This determines the “cost basis” of assets that are to be transferred to beneficiaries. If assets are later sold and used to distribute proceeds, the cost-basis is used to determine income tax liability.
- Consolidate multiple financial accounts into one account. The check register will become a register of trust activities and beneficiaries may inspect it. The trustee’s first responsibility is to protect the trust’s funds.
- Pay outstanding bills and debts. The trustee may be personally liable if not handled correctly.
- Meet with an estate planning attorney. An estate planning attorney will be able to walk you through all these steps. They will also help you determine which income tax returns to file.
- File claims for life insurance, IRAs and annuities.
- Account for all trust financial activity. Beneficiaries will appreciate the openness and honesty the trustee provides. Create an accounting sheet from the grantor’s date of death to show exactly what you’ve done in settling the trust.
- Transfer assets to beneficiaries according to the terms of the trust. An estate planning attorney can help you in this task as well. They will send each beneficiary a receipt, release and waiver for any further responsibility and liability to protect you from any claims the beneficiary has..
The responsibilities of a trustee are similar to the responsibilities of an executor, except that wills are used in probate court and trusts are created to avoid probate court. Another benefit of trusts is that they can help avoid litigation between beneficiaries and keep the estate’s affairs private.
Reference: InsuranceNewsNet.com (Oct. 19, 2020) “Trustee responsibilities”