Trustees manage money and assets that have been put aside on behalf of another person while following the rules of the trust. The trust agreement will usually detail what a trustee can and can’t do in the role.
Many people are their own trustee for as long as they’re mentally able to do the job, and if they’re married, they might allow their spouse to act as a trustee on their behalf. If they’re not married, or the spouse isn’t able to act as the trustee, that’s where a successor trustee comes in to manage the trust. The most important aspect of a trustee’s duties and responsibilities is to always act in the best interest of the trust.
Trustee Duties and Responsibilities
Trustees have many responsibilities, from taking care of the day-to-day finances of the trust to distributing assets to beneficiaries. A trustee’s specific duties are dependent upon what’s listed in the trust agreement and are sometimes dictated by the type of assets being held. Here are some examples of important duties and responsibilities of a trustee:
- Protect the trust’s property and assets
- Act in accordance with the trust document
- Avoid conflicts of interest and put the trust document first
- Keep detailed records
- Give beneficiaries and federal and state agencies routine reports
- Invest and diversify assets when necessary
- Prepare tax-related forms and filings
- Answer beneficiaries’ questions as needed
A trustee is also responsible for paying the federal income tax on behalf of the trust. Any income taken in by the trust that’s higher than the value of its distributions to its beneficiaries is usually subject to income tax.