The Trustees Role
What is a Trustee?
A Trustee in a Living Trust has similar responsibilities as an Executor in a Will. A Living Trust is the most effective, cost-efficient and private estate plan, administered outside of Probate Court. In contrast, a Will requires Probate. Incidentally, Wills for Heroes provides an excellent service for First Responders by providing them a basic Will that states the distribution of assets upon your death.
However, it is important to understand that all Wills are required to be filed in Probate Court when you die. Probate is a long and expensive court process. Consequently, it is in your best interests to avoid it.
What Does a Trustee Do?
A Trustee follows your instructions in your Living Trust, distributes your assets to your beneficiaries and handles all the responsibilities of your estate at the end of your life.
- You decide the specific gifts and the distribution of your assets, by percentage or by amount. You can also provide for any particular circumstances such as the age of distribution and when to sell real estate, act. As a result, your Trustee follows these instructions.
- Your accounts will already be in the name of your Trust. Therefore, when you die or become incapacitated, your Trustee will immediately assume responsibility for these accounts and pay any necessary bills.
- Your Trustee has a “fiduciary” responsibility to every beneficiary in your Trust. Consequently, by law, your Trustee must treat each beneficiary equally and fairly and must maintain the investments of your Trust responsibly.
- The Trustee provides a copy of your Trust to each beneficiary and complete accounting of all assets and distributions. Importantly, no one, other than a named beneficiary, is entitled to copy of your Trust, which remains private.
- Your real estate will be prepared for sale and sold by the Trustee.
- If any of your beneficiaries are receiving public benefits, your trust should contain Supplemental Needs provisions to protect against loss of those benefits or government reimbursement. On the other hand, any beneficiary may acquire a disability by accident or illness before your death. Therefore, every Trust should contain these special needs protections to prepare your Trustee to take advantage of them.
- Your Trustee will file a final income tax return for your estate.
- A Trustee distributes all proceeds of life insurance policies, IRA’s or deferred compensation plans to the beneficiaries named with the financial institutions. It is essential to remember that a minor, under the age of 18, should never be named as the beneficiary of deferred savings or life insurance policies because all such proceeds are subject to Probate Court. Alternatively, you would list your trust, after your spouse, as the beneficiary of these accounts and policies.
Who Should I Choose?
Who do you trust?
It always depends on the person. And if you have children and have more than one child, you know the difference.
I know that makes you smile because it’s true. Every child is different; possible an organized one, and a free spirit. And, when it comes to the responsibility of handling your estate, you know who to choose, just as well as you know who not to pick. If you do not have children, the same principle applies. Every person is different. Therefore, appoint the most responsible person you know to be your Trustee.
The Right Estate Plan
A Trustee certainly has important responsibilities, and keeping the peace in your family is one of them. Consequently, you should make this decision carefully. However, their task will be considerably less stressful and time-consuming than if they had to act as an Executor in a Will. Choose wisely. Then you can rest in Peace.
A Revocable Living Trust is a written, legal document that allows you to privately and efficiently pass your assets (real property, bank accounts, stock, saving certificates, personal property, etc.) to your family, friends or charities after your death – outside of Probate Court. (Remember, all Wills are subject to Probate. ) Additionally, your life insurance policies and deferred compensation accounts can name your Living Trust as beneficiary, subject to essential tax considerations.
This blog entry has been created for information and planning purposes. It is not intended to be, nor should it be substituted for, legal advice, which turns on specific facts, as well as laws in specific jurisdictions. No reader of this blog should act or refrain from acting on the basis of any information included in, or accessible through, this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the reader’s state, country or other appropriate licensing jurisdiction.