What Does a Trustee Really Do?

When it comes to estate planning, trusts are powerful tools that can help you protect and manage your assets, minimize estate taxes, and ensure a smooth transfer of wealth to your beneficiaries. A crucial role in the trust management process is that of the trustee.

But what does a trustee really do, and why is it important to have an attorney experienced in both trust creation and trust administration? Let's delve into these questions and answer them so you can gain a better understanding of the trustee's role in estate planning.

At its core, a trustee is a fiduciary who holds legal title to assets for the benefit of one or more beneficiaries. The trustee is tasked with managing and administering the trust according to the terms and instructions outlined in the trust document. This role carries significant responsibilities, and trustees are legally bound to act in the best interests of the beneficiaries. Let us share the key responsibilities of a trustee:

1. Asset Management. One of the primary duties of a trustee is managing the assets held within the trust. This may involve investing assets, overseeing real estate holdings, and making financial decisions aimed at preserving and growing the trust's value.

2. Record Keeping. Trustees must maintain accurate records of all trust transactions, including income, expenses, and distributions. This transparency is crucial to ensure accountability.

3. Communication. Trustees are responsible for keeping beneficiaries informed about the trust's status, financial performance, and any distributions. Open communication helps build trust and transparency.

4. Tax Compliance. Trustees must ensure that the trust complies with all applicable tax laws. This includes filing tax returns and managing any tax liabilities.

5. Distribution of Assets. Depending on the trust's terms, a trustee may be responsible for distributing assets to beneficiaries at specified times or under certain conditions.

6. Conflict Resolution. Trustees often play a role in resolving disputes among beneficiaries or addressing any conflicts that may arise during the administration of the trust.

Given the intricate nature of trust administration, it's essential to have an attorney who is well-versed in both trust creation and trust administration. Your attorney’s expertise is invaluable in two parts. First in the creation of your trust. When creating a trust, an experienced attorney can help you design a trust that aligns with your specific goals and wishes. They can assist in choosing the right type of trust, drafting the trust document, and ensuring that your intentions are clearly stated.

Second, in the actual trust administration. During the trust administration phase, an attorney with experience in this area can guide the trustee through their responsibilities, ensuring compliance with legal requirements and the trust's terms. Your attorney, whether they drafted it at the outset or not, can offer legal advice on asset management, tax planning, and resolving any challenges that may arise.

In summary, a trustee's role is multifaceted, involving asset management, communication, and legal compliance. To navigate the complexities of trust administration effectively, it's essential to have an attorney who is experienced in both trust creation and trust administration by your side. With their guidance, you can ensure that your trust serves its intended purpose, protecting your assets and benefiting your loved ones according to your wishes.

Porzio's Wealth Preservation Group is made up of attorneys from the law firm of Porzio, Bromberg, & Newman, P.C., a full-service law firm headquartered in Morristown, New Jersey with additional offices in New York, Pennsylvania, Delaware, Massachusetts, and Puerto Rico. Our team of attorneys created Porzio Planning as a dedicated resource to better serve and provide valuable information to our clients and community. As part of Porzio, Bromberg, & Newman, we have the convenience and vast resources to call upon when you have questions and needs outside of wealth preservation planning. Your goal is our goal. Our experienced attorneys are here to help you, as a trustee, navigate through this challenging time and make sure you feel secure and confident in your trust administration responsibilities to ensure you reach your goals. We encourage you to contact us today.