Bay Area Estate And Tax Planning Law Firm

The responsibilities of a trustee

On Behalf of | Mar 31, 2024 | Probate And Estate Administration |

California trustees have a fiduciary relationship with the trust’s beneficiaries. In other words, they are legally responsible for acting on their behalf, not their own. While doctors and lawyers also have a fiduciary responsibility to their patients and clients, a financial trustee manages property or money.

Duties of a trustee

A trustee may be a friend or relative of the trust’s creator or a professional who charges a fee that might equal a certain percentage of the assets. Whatever the case, the responsibilities are identical.

Fiduciary duties vary depending on the type of assets in the trust and the grantor’s wishes. For example, the trust’s documents may state that the trustee should liquidate the assets and distribute the funds to named beneficiaries in a stated fashion upon the grantor’s death.

On the other hand, the intent may be to keep the trust active in perpetuity, and future generations may become beneficiaries. This situation might involve a trustee’s hands-on management of stocks, bonds, and real estate investments, or, if the documents allow it, professional managers with the necessary expertise might assume these time-intensive tasks.

Trustees must keep all the trust’s records and documents, arrange meetings with any co-trustees, and communicate with the beneficiaries. They are responsible for filing any regulatory paperwork, including federal and state tax returns.

Characteristics of a good trustee

First and foremost, a trustee should be honest and loyal to the living or deceased grantor and beneficiaries. A working knowledge of financial investing is helpful if they are to oversee brokerage accounts, even though they may choose not to manage them directly. Trustees are accountable to the beneficiaries, so they must possess good communication skills and the ability to mediate disagreements and defuse contentious situations.