Trustees review an estate plan in an office

What Is The Role Of A Trustee?

Many people opt to put their assets into trusts to avoid having their estates go through the probate process. However, setting up a trust can be complex, and there are many details that need to be considered before a trust can be officially added to an individual’s existing estate plan. One of the most important of these considerations is selecting the right trustee to handle the trust. If you are establishing a trust, consider contacting one of the knowledgeable trust attorneys at Roulet Law Firm, P.A. Our experienced team can assist you in selecting an astute and reliable trustee for trust administration and help to ensure that all parties involved understand the obligations attendant to trustee roles. Schedule a personal, confidential consultation today by calling our Minnetonka, MN office at (763) 420-5087 or our Venice, FL office at (941) 909-4644.

What Is a Trustee?

Placing assets in a trust is a common estate planning practice often used to prevent putting some or all of an individual’s estate through probate. The trustee is the individual or party that is responsible for the administration of the assets and property contained within the trust for the trust's beneficiaries.

Trustees have a fiduciary duty to make decisions regarding the trust that are in the best interests of the beneficiaries. Trustees are named by the grantor, the party who created the trust. The grantor is responsible for appointing a trustee they feel they can rely on to follow their wishes and handle the trust as intended.

Types of Trustees

Grantors have significant latitude in deciding who should administer the trust. Since trustees have authority over the trust, it is essential to ensure they understand their fiduciary rules and responsibilities and the goals of the trust. Due to the level of responsibility involved, some individuals choose a friend or family member as trustee. On the other hand, grantors hoping to use the trust as part of a larger estate planning process for building generational wealth, may wish to select a financial advisor or a law firm with estate planning expertise to ensure that the trustee is prepared for managing complex financial investments over time.

Several types of trustees can be chosen to administer a trust, although some trusts may be subject to Internal Revenue Service (IRS) requirements for approved nonbank trustees and custodians. There are three primary types of trustees:

  • Institutional trustees - Corporations and financial institutions will often choose institutional trustees to handle their clients’ trusts.
  • Individual trustees - An individual trustee is often the friend or family member of the grantor.
  • Independent trustees - Independent trustees may include accountants, financial advisors, and trust fund management companies.

What It Means to Have a Trustee

Before a grantor designates a trustee, both parties should understand trustee roles as well as any specific duties that will be required to manage the particular assets the grantor places in the trust for designated beneficiaries. A trust could hold several businesses designed to generate income for the beneficiaries. The trustee will be responsible for ensuring these businesses remain operational so they can continue to generate revenue. These responsibilities are different from those involved in managing investment accounts or overseeing the maintenance of real property.

Trustees may be called upon to oversee and manage trust accounts composed of other types of investments, such as stocks, bonds, and other equities. Regardless of the types of assets included in the trust, however, trustee roles always demand that the trustee put their own interests aside and act in the best interests of the trust and its beneficiaries.

What Are the Trustee’s Responsibilities?

Depending on the contents of the trust, there may be a wide array of responsibilities and duties to which the trustee will need to agree. For this reason, before selecting a trustee, it is vital to go over the responsibilities inherent in trustee roles with them, so they understand what is expected of them in fulfilling their obligations. First and foremost, the trustee must recognize that they are accepting a responsibility to administer the trust in accordance with the grantor's wishes. Trustees have a duty to make important decisions regarding trust contents, as circumstances may change over time.

Trustees must also file necessary tax documents and reports, handle transactions, and distribute assets to beneficiaries. Other responsibilities could include:

Protecting the Trust’s Assets

Trustees must understand who beneficiaries are, how assets are to be paid to beneficiaries, and when to keep assets separate from other estate assets.

Handling Investments

Trustees should be prepared to handle investment assets. Those that need guidance can turn to financial advisors and estate planning lawyers for legal advice and support. How these assets are allocated, adjusted, or invested should align with the grantor's expressed wishes.

Communicating Regularly with Beneficiaries

Trustees have a duty to maintain open communication with beneficiaries and contact them as needed to make distributions.

Selecting Your Trustee

Selecting the right trustee can be one of grantor's most difficult responsibilities. Here are some of the parties who could be a good fit for the role:

Friends or Family

Many grantors opt to have a friend or family member act as the trustee. However, assigning friends or family members to act as trustees can sometimes cause contention within the family. Families often argue over assets or become angry when the trustee refuses to give in to their demands, and if the trustee is also a member or close friend of the family, these tensions can lead to deteriorating personal relationships over time.

A grantor who chooses a family member or friend to act as their trustee should be prepared to select a secondary trustee should the initial trustee be unable to fulfill their obligations.

Trust Attorney

Selecting a trust attorney to act as the trustee may be well advised. A trust lawyer at Roulet Law Firm, P.A., will understand the intricacies of estate laws and have extensive experience handling multiple client trusts.

Trust Companies

A trust company or wealth management firm works with financial professionals, accountants, and lawyers who can help build generational wealth. They have the resources to handle sizeable estates and have a reputation for fulfilling their fiduciary duties, such as those the United States Department of Labor specifies for companies managing retirement accounts.

Contact an Estate Planning Attorney To Learn More

The trustee has a fiduciary duty to handle the assets placed in the trust as the grantor intends. Trustee roles encompass multiple complex responsibilities and the authority to make crucial decisions regarding the contents of the trust. For this reason, selecting the right trustee is essential. If you have questions about how trusts work, how to choose the right trustee, or what duties a trustee takes on, consider contacting an experienced trust attorney at Roulet Law Firm, P.A. Fill out our secured contact form or call our Minnetonka, MInnesota office at (763) 227-7863 or our Venice, Florida office at (941) 909-4644 to schedule your confidential, no-obligation consultation.


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Chuck Roulet
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Nationally Recognized Estate Planning Attorney, Author, and Speaker
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