A person, corporation or entity is appointed to manage money, property or interest that will be used to benefit another person.There are laws on how to act as a Trustee.If you have been selected to serve as Trustee of a trust, you need to understand your role and understand the trust itself.
Step 1: You should read the trust document.
A trust is a legal creation where certain identified property is held and managed by one person for the benefit of others.The entire arrangement is controlled by a document called the trust document, which may or may not be connected with a person's will.The trust document will usually include provisions for successor trustees, identify the property, define a purpose, and set guidelines for the operation of the trust.Your first job as a Trustee is to be familiar with the terms of the trust document.
Step 2: Discuss your role with the settlor.
The person who put property into the trust is called the settlor.The settlor may have died and created the trust through a will.In many cases, the settlor may have created the trust as a form of financial planning.If this is the case, you should discuss the settlor's intentions and ask questions about interpreting the trust document.Once a trust document is written and put into effect, the written contents of the trust control your actions as a Trustee.You must follow the trust if the settlor's opinion differs from yours.
Step 3: Discuss your role with the beneficiaries.
Your role as a Trustee is to serve the beneficiaries, but you don't act at their discretion.You can discuss the trust with the beneficiaries.
Step 4: The type of trust is studied by state law.
A trust is controlled by state laws.You need to review the laws that apply to your type of trust.If you want to understand what you can and cannot do as a Trustee, you need to hire an attorney.
Step 5: The trust property can be assessed or audited.
Newly appointed people need to know what property they are charged with controlling and administering.This may be direct if you are taking over an established trust.You may need to investigate if you are acting as Trustee of a trust that was created through a will.Find out the type and value of all the property that the trust owns.
Step 6: Look at past accounts and financial statements.
You will need to find records for the trust property.Look for bank account statements, mortgage property statements and any other financial statements that a prior Trustee or other representative may have created.Try to find the most recent reports if you pay attention to the dates.A boat is listed in a year old report as one of the trust's possessions.You need to find out what happened to that boat.There should be a record of it being sold, stored, donated, or something.If you can't find a record, the boat is in the trust's possession and you need to find it.
Step 7: Obtain and study the trust's tax returns.
A trust can receive income.It is necessary to file income tax returns with the state and the IRS.You can use the tax returns to understand the trust's holdings and operations.You need to resolve the dispute if you find a discrepancy between the tax return and the property you identified during your initial investigation.You should try to get copies of the tax returns if the trust has been in existence for more than a year.You can get copies of tax returns from the IRS.If no tax returns have been filed, you may need to file them.Penalties and interest could be incurred by the trust if returns are not filed.You might need to talk to an accountant or tax attorney about this.
Step 8: Do you know who the beneficiaries of the trust are?
For some trusts, it's easy to identify the beneficiaries, as long as you read the trust document.The beneficiaries of a charitable or benevolent trust are usually groups of people or members of the general public.It is possible that you need to identify the types of people you are expected to serve.The York Museums Trust exists to operate cultural museums for the benefit of the general public.People who attend cultural museums are the beneficiaries.The Artist Trust in Seattle, Washington provides grants to support new artworks.The artist community in and around Seattle would be the beneficiaries of this trust.
Step 9: Constantly communicate with the beneficiaries.
You are mostly responsible to the beneficiaries as a Trustee.The family members of the trust settlor may be the beneficiaries.Beneficiaries could include the general public.If the beneficiaries are more than one person, your level of communication may be informal, consisting of telephone or email updates.If the beneficiaries comprise a less identifiable group, you will need to draft an annual report to show the operations of the trust, its income and expenses, and any plans for the immediate future.
Step 10: Trust property can be given to the beneficiaries.
Provisions about distributing trust property should be included in the trust document.A single distribution could eliminate the trust property.It could mean that you make regular payments to people.The general classes of people who get less tangible benefits from the trust could be the beneficiaries.
Step 11: The trust document requires you to act in accordance with it.
The settlor's wishes are defined in the trust document.There are a wide range of purposes for trusts.If your trust was the creation of a person's will, your role may be limited to distributing assets to the beneficiaries and then closing the trust.Some charitable trusts are set up to make investments, conduct business, or care for certain properties.
Step 12: Make and manage investments.
You may not be told to invest the trust property in the document.As a Trustee, you are expected to act in the best interest of the trust and its beneficiaries.The best interest of the beneficiaries would probably be served by investing the money that the trust has.Unless you are a trained and qualified financial adviser, you should not hire someone to handle this part of the trust's business.Make sure that the trust's language allows you to pay for the services out of its property.
Step 13: Prepare reports, statements or tax returns.
You will be responsible for regular reporting as the trust continues.State or federal law may require some of these reports.An annual report to the beneficiaries will be required by the trust document.
Step 14: Don't exceed your authority.
As a Trustee, you can decide what actions are in the best interest of the trust and the beneficiaries.It is possible to pay yourself a reasonable salary and hire others for work that is necessary.If you exceed your authority, you could face legal challenges for misuse of trust property.You should consult with an attorney if you have questions about the authority of the trust.It would be a reasonable expense for the trust to pay an attorney for an opinion.
Step 15: A corporate Trustee can be hired.
The work is more than you want to do alone, if you decide to review the demands of the trust document.A financial company can be hired to do the work of the Trustee.You would retain the title of Trustee, but you would hire an agency to manage the trust for you.You can find such companies by searching for trust managers online, or by asking friends, colleagues or other professionals in the financial world.It is possible to target your decision around the objectives of the trust.
Step 16: The successor trustees language should be reviewed.
Review the language of the trust document if you don't want to be a Trustee.The successor Trustee should be named in the language.Inform the person who is identified as successor.The trust document should say something like this: "I appoint John Doe to serve as Trustee."Mary Smith will be appointed as successor Trustee if John Doe is unable or unwilling to serve.
Step 17: You should decline your role as a Trustee in writing.
Since the trust creates a legal obligation by appointing you as Trustee, you need to make it clear to everyone that you are declining the role and do not accept the obligation.You should decline the appointment to serve as Trustee if you write a letter to the settlor.There is no confusion if you include a date.
Step 18: Check the state law for additional requirements.
To find out if you need to take any further action, you should review your state's laws on trusts and trust operations.You might have to file your withdrawal with the secretary of state's office.