If you want to create a trust for your family, there will be important duties your trustee should carry out. In general, a trustee must honor the wishes of the person who created the trust and carry out duties owed to beneficiaries. Depending on the trust you create, your trustee may have specific and even complicated duties to perform.
Before you choose someone to be your trustee, you should have a good idea of the kinds of duties your trustee must complete. CPA Journal provides an overview of the different ways trustees serve their beneficiaries.
Make payments to beneficiaries
The primary duty of many trustees is to disperse payments to beneficiaries. You might compose a trust document dictating when and how much to give to your family members. Some trust creators will condition payments on specific expenditures. You could instruct your trustee to only provide money for a child to spend on a house, a car or college enrollment.
Some trust creators give their trustees spending discretion. Some trustees give more money to beneficiaries who need it and less to beneficiaries who are self sufficient. There are even trustees who outright deny beneficiaries any share of the trust. Be aware that this could provoke conflict between your relatives and your trustee, so discussing these matters with your family beforehand may be important.
Pay on behalf of a beneficiary
If you have a special needs child or a family member who cannot spend money due to poor spending habits or incapacitation, your trustee might not send money to the beneficiary. Instead, your trustee will make payments on behalf of your relative. These expenses may include food, medicine, tuition, medical treatments, apartment rent, and mortgage payments.
Other trustee duties
There are other duties a trustee should or may have to perform depending on the trust involved. These duties include but are not limited to the following:
- Pay the bills of the trust
- Keep up trust records
- Maintain insurance for property owned by the trust
- Create a strategy to invest trust assets
- Oversee trust investments
Whatever your trustee must do, it is important that your trustee is able to communicate with beneficiaries. If your family members do not hear from your trustee, they might grow suspicious of your trustee’s actions. They may even litigate the trustee. Whoever you pick as your trustee should have the necessary skills for the position.