Trustees in Estate Planning

What is a Trustee?

In estate planning, trusts are frequently utilized, and the trustee is responsible for overseeing the trust’s assets on behalf of its beneficiaries. The trust’s “grantor,” often known as the person or organization who founded the trust, is known as the beneficiary.

In addition, trustees may be held financially accountable for any harm to the trust or its assets caused by their acts, which could result in the trust losing its assets and being unable to assist its beneficiaries.

What are the types of Trustees?

As the name implies, a trustee typically oversees a trust’s assets. They can, however, be useful in other circumstances. Other typical trustee kinds include:

Bankruptcy trustee

These trustees are chosen by the U.S. Bankruptcy Court to manage the assets of an individual or company that has filed for bankruptcy.

Charitable trustee

These trustees oversee trust assets and distribute them in accordance with the creator of the trust (trustor).

Investment trustee

These oversee the day-to-day management of an investment portfolio or account.

Successor trustee

When the individual who established the trust passes away or becomes incapable of managing the trust, these successor trustees take over.

Corporate trustee

These are the divisions that create and manage trusts on behalf of their clients at financial institutions or investment firms.

What is the role of an Estate Plan Trustee?

Trustee duties has a variety of significant responsibilities and duties depending on the kind of trust they manage, including:

Maintaining and monitoring the trust’s assets

This could involve investing profits out of an investment account or keeping real estate assets.

Transferring trust asset to beneficiaries

According to the guidelines outlined in the trust documents, a trustee distributes trust assets. For instance, the person who created the trust might have desired for the beneficiaries to inherit trust assets upon their marriage or after their death.

Keeping track of all trust costs, submitting tax returns, and updating beneficiaries when required

Trustees are required to act in the beneficiaries of the trust’s best interests. A trustee may contact with beneficiaries and keep them updated on what’s happening with the trust’s assets based on the type of trust they manage.

Keeping trust property separated from their personal assets

The trustee of a trust may not use assets of the trust for personal gain unless the trust creator authorizes it. For instance, a trustee is not permitted to withdraw funds from the trust’s bank account for personal use.

Who can be a Trustee?

A trustee in the United States must be a U.S. citizen, a legal adult, and “of sound mind,” which means they must be able to comprehend their acts. You can pick just about anyone as long as your trustee meets these criteria. The role of an estate plan trustee is important. Some of the most well-liked options for trustees include:

Member of the Family 

Surviving partners frequently serve as trustees for marriage and family trusts. Many people feel more secure knowing that a family member is in charge of the trust’s assets. Additionally, the trust administration by family members saves money on fees that a professional trustee would demand. But most of these individuals lack the necessary education and experience and can be prone to conflicts of interest.

Reliable Friend

Even while a close friend may fully comprehend the grantor’s intentions, they might not have the required abilities, time, or energy to carry them out effectively.

Accountants and Lawyers

People typically contact their attorney or accountant when choosing a trustee. If the applicant possesses the necessary credentials and experience, a close friend and confidant, such as an accountant or attorney, might be an appropriate option.

Corporate Trustee

Independent trust firms and bank trust divisions provide expert trust services to the general public. You can rely on them to take care of the necessary tax and accounting tasks that the majority of trusts must complete. Corporate trustees may receive a minimum yearly fee, annual administration fees, and a portion of the trust’s assets as compensation. Ask about the prices before deciding on a corporate trustee; they can be less expensive than you think. The family members must also have faith in the corporate trustee’s ability to stay in touch with them and learn about their needs on a regular basis.

It is crucial to keep in mind that whoever you select to serve as your trustee should be:

• Honest and trustworthy
• Organized and meticulous
• Capable of getting along with each other, especially your family and beneficiaries
• Willing to be your trustee

How much should a trustee be paid?

Considering how much work managing a trust and allocating assets can be, trustees are frequently paid for their time and labor.

• A corporate trustee (such as a bank) will probably set their own rates if you hire them. Corporate trustees often receive compensation of 1% to 2% of the trust’s assets.
• You can indicate in the trust document how much and how frequent your trustee should be paid if you name a friend or member of your family as your trustee. Close relatives often decide to waive compensation.

The amount you pay your trustee is entirely up to you. You might want to take a seat with them to establish what constitutes a fair wage for their work together. Here are a few compensation plans you might want to think about:

• Every year that your trustee manages your trust, you pay them an annual flat fee.
• For the time they spend operating your trust, you pay your trustee an hourly rate.
• You provide your trustee a portion of the trust’s assets as payment after your death.

Take note that these may vary based on your situation. There may also be an instance where you don’t specify compensation terms in your trust document and other confusing situations, to get help and legal advice regarding these cases, contact our Washington state law office at Jones Legacy Law.

Commonly Asked Questions about Trustees

Can a trustee take a trust beneficiary out of a trust?

In most cases, a trustee cannot remove a beneficiary off of a trust. When a trust document can be changed to eliminate a beneficiary, only the person who created the trust can do so.

In certain circumstances, a trustee may be able to refuse to give a beneficiary designations. The trustee might temporarily withhold the beneficiary’s inheritance if, for instance, they have a budget problem and might mismanage their money. The trustee will uphold these limitations, which the trust’s creator must specify in the trust document. These decisions cannot be left up to the trustee alone.

Can a beneficiary also be the trustee?

Yes, a beneficiary may also be a trustee. You may designate your spouse or an adult child as your trustee, for instance, and they would still be eligible to collect assets from your trust after your death.

One important thing to bear in mind is that any fees you pay a beneficiary who will serve as your trustee (and whom you wish to compensate for their services) will be taxed as income (income tax). Any inheritance they obtain through your trust, however, is not taxed. When choosing the most tax-efficient approach to transfer your assets, keep this in mind.

Do you have any additional questions? Talk with our dependable Washington Estate Planning attorney.

Call our Trusted Tacoma Estate Planning Lawyer Now!

The will or trust instruments that created the trust will often outline the duties of a trustee in charge of managing the assets of an estate. It is advisable to consult with a trusted estate planning lawyer in Tacoma, Washington to make sure it has been set up properly. It would be a great choice to meet with our knowledgeable attorney in Jones Legacy Law if you are considering acting as a trustee for someone else to discuss and know the expectations of the role of an estate plan trustee. 

Our best lawyer can also help you with other legal issues regarding Estate Planning such as the proceedings to avoid going to the Probate court, Living Trust, Living Wills, Special needs planning, and more (just visit our main website to see more of what we can offer), as well as Elder Law, Probate and Estate Administration, and Chapter 7 and 13 Bankruptcy.