If someone names you as trustee of their trust, it’s important for you to know what duties you will have to perform once they pass away in order to legally transfer the trust’s assets to its beneficiaries. This process is known as trust settlement, and can take between 12-24 months depending on the trust’s complexity.
Accumulating Trust Assets
As a successor trustee, your first duty will be to accumulate and catalog the trust’s assets. To do this, you will need a copy of the trust, copies of the decedent’s pour-over will (if one exists), and their death certificate.. You will also need to open a bank account under your name as trustee. This bank account will be used to transfer the assets once you find them.
When searching for assets, be sure to check for the following:
- Bank, investment and retirement accounts
- Life insurance policies
- Personal property, such as jewelry, furniture, antique collections, etc.
Managing Trust Assets
During the time it takes you to settle the trust, you will need to manage its assets. Management duties may include:
- Using some of the assets to pay the decedent’s outstanding taxes and bills
- Selling some of the assets, if necessary, to accomplish these payments
- Collecting all applicable interest, dividend and other payments
- Investing trust assets so as to maximize the trust’s value
Acting as Fiduciary
Keep in mind that, as trustee, you are acting in a fiduciary capacity with regard to the trust and its beneficiaries. Consequently, everything you do as trustee must be done for the benefit of the trust and its beneficiaries.
It is important to note that this does not mean you must perform your duties perfectly. Inadvertent mistakes can happen, such as an investment failing to produce its expected yields. No one will hold you accountable for such occurrences.
The only reason why someone might sue you for breach of your fiduciary responsibilities is if you deliberately or knowingly do something such as:
- Act in your own best interests instead of those of the trust and its beneficiaries
- Favor one beneficiary over another
- Give inaccurate or insufficient information to one or more beneficiaries
- Miss a tax or other filing deadline
Collecting Your Fee
You are entitled to reimburse yourself out of trust assets for any personal financial outlays you make on behalf of the trust. You are also entitled to charge and collect a fee for your trustee duties.
Making a Final Accounting
As you manage the trust, be sure to keep detailed records of all income and outgo. This will make it easier for you to construct the trust’s final accounting prior to ultimate distribution of its remaining assets to its beneficiaries.
Distributing Trust Assets
Once you have done all of the above, you can distribute the remaining trust assets to the beneficiaries in accordance with the terms of the trust. For your own protection, have each beneficiary sign a receipt for the amount they receive and the date on which they received it.
If you find yourself feeling overwhelmed, know that AmeriEstate Legal Plan, Inc. is here to help. Our nationwide team of estate planning professionals is deeply experienced in trust settlement and ready to stand by you every step of the way. Feel free to contact us Monday through Friday from 8am to 4:30pm. You’ll be glad you did.