When you create your trust, an essential aspect is determining who you wish to have as your Trustee. Your Trustee is authorized to carry out your wishes, therefore, you want this individual to be an honest, trustworthy, and responsible person. Being selected to someone’s trustee comes with great honor and explicit duties.
What is a Trust?
The person who creates a trust can either be the “grantor,” “settlor,” or “trustor.” A trust is a legal arrangement where the trustor gives another person authority to manage assets for the benefit of a third party. When the trustor creates their trust, they assign an initial trustee and a successor trustee (also known as the back-up trustee) to manage the assets in accordance with the trust terms.
What is a Trustee & What does a Trustee do?
A trustee is the person or financial institution that is legally responsible for managing the property in a trust. Since no size fits all, trustees have different duties based on the type of trust they manage. However, some of these duties and responsibilities include the following:
- The Trustee must act in utmost good faith, putting the trustor’s interest before his or her own while managing the trustor’s finances in accordance with the terms of the trust.
- The Trustee must keep track of and managing assets in a trust.
- The Trustee is authorized to distribute trust assets to its beneficiaries.
- The Trustee must keep records for all trust expenses, filing tax returns, and reporting to the beneficiaries when necessary.
Note that there are legal protections to ensure that a Trustee is legally prevented from using any of the trust property for his or her own profit or benefit or changing the trust to be advantageous for him or her.
When can a Trustee Serve?
- A Trustee may serve when the trustor becomes incapacitated. When the trustor becomes incapacitated, the Trustee must manage all financial responsibilities including duties like paying property taxes and ensuring that appropriate care is being given. Since level of care changes as a trustor’s condition does, a Trustee’s duties and tasks may change.
- When a trustor passes away, the Trustee’s role is to administer the Trust Estate in accordance with the trust.
Is a Trustee paid?
Trustees are often compensated for their time and effort. It is up to the trustor to decide how much they believed was reasonable payment for the Trustee’s efforts.
If the trustor did not specify compensation, and a Trustee assumes duties in accordance with the trust, a local court will set compensation based on Oklahoma’s laws.
What is a co-trustee?
Co-trustees, or joint trustees, are two or more entities that are responsible for managing a trust together.
The trustor can nominate co-trustees to act together when managing the trust. Unless the trust says otherwise, co-trustees must agree when making decisions. However, if the co-trustees do not agree, then beneficiaries of the trust suffer. Trust assets can be held in litigation besides being resolved efficiently.
Conclusion
Becoming a trustee or co-trustee carries a high level of responsibility. If you have any questions about obtaining a trust, becoming a Trustee, or administering a Trust, Skillern Law firm may offer the answers you are looking for and available to guide you through the process. Set up an appointment today to discuss your options!