You have been chosen as a Successor Trustee. It is important to know facts on what your duties are if you are chosen as a California Trustee.
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Know Your Duties
When nominated to be a trustee you owe many duties and obligations to the beneficiaries. You are a fiduciary and owe a fiduciary duty to the beneficiaries. You must always act in the best interest of the beneficiaries and estate and must not intentionally do anything that could work against the beneficiaries. Ideally, you should be fiscally sound, conservative, and financially savvy. You need to be, quite simply, a trustworthy individual. Therefore, if you are going to succeed as a Trustee, you have to know what your duties are in the first place.
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Know Who Your Beneficiaries Are
As a Trustee, you have a duty to know who your beneficiaries are. This is more important when you have the power to make distributions based on what the beneficiaries needs are and whether a distribution must be made to meet those needs. You must not ignore the beneficiary.
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Know the Trust Assets
Trustees must take control of Trust assets. When the time comes,you need to know how to gain access to your personal information and your Estate Planning documents. The more organized you are, the easier it will be for the person executing your documents.
In our Estate Planning practice, we recommend that our clients create a list of active assets, such as bank accounts, retirement information with account numbers, life insurance policy information with policy numbers, real estate addresses, mortgage information, and credit card carriers. This makes the life of your trustee a lot easier. You need not provide this information to your trustee during your lifetime, but it is ideal to inform where he or she can find these details, should you pass away.
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Keep All Receipts and Statements For Accounting
Every Trustee must keep excellent records. How much money the trust has, all the expenditures, what distributions were made, etc. This record keeping would be evidenced by showing each transaction by date, description and amount. Therefore, keep all receipts, account statements, and similar financial documents so a thorough accounting can be prepared.
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Understand Trust Accounting
Probate Code section 1061 lists exactly what a Trust accounting must have.
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Communication/Information is Key
With any relationship communication is key. Communicate as often as possible with beneficiaries. The more you communicate, the better.
How To Pick A Trustee
If you have a trust, you need a trustee. A Trustee is the person who will execute your trust instrument. Many clients believe the trust can act on its own and can make its own decisions. However, a trust is a contract which lays out what is to happen with the trust assets, but a person is required to make sure all that happens – this is your trustee.
During your life time, you will be the acting trustee of your trust. When you create your living trust, you will nominate successor trustees. These individuals will succeed you upon your passing to fulfill the position of trustee at that time.
The trustee is a fiduciary and owes a fiduciary duty to your beneficiaries. The trustee must always act in the best interest of the beneficiaries and estate and must not intentionally do anything that could work against the beneficiaries. Ideally, the trustee should be fiscally sound, conservative, and financially savvy. The trustee needs to be, quite simply, a trustworthy individual.
The trustee will ensure that your bills are paid up, finalize your Estate, file taxes for the trust on an annual basis, and distribute assets to your heirs. The trustee needs to know where your personal information can be found, including your Estate Planning documents. The more organized you are, the easier it will be for the person executing your documents.
In our Estate Planning practice, we recommend to our clients they create a list of their active assets, such as bank accounts, retirement information with account numbers, life insurance policy information with policy numbers, real estate addresses, mortgage information, and credit card carriers. This makes the life of your trustee a lot easier.
Time Frame of Commitment
If you have young children or heirs, the trustee may have to act longer until the age you specified the children need to attain to inherit the assets. Thus, you want to choose a trustee who would likely be around based on the ages of your children. Even if you do not have young children, it might be fruitful to select a trustee who is younger in age to yourself.
Child As Trustee
Many factors need to be taken into account when naming a child as your trustee. Is the child old enough? Your trustee must be 18 years or older. Even if your child has reached the age of majority, are they up to the task from a maturity stand point?
Or, do you have multiple children who might not be able to see eye-to-eye, thus creating a conflict by naming them as joint or “co-trustees.” Certainly, it seems the ideal and easy choice to name your children as trustee, but it can result in unforeseen complications if the idea is not properly thought out.
Business Partner as Trustee
Naming your business partner as your trustee is another common potential pitfall. There is a clear conflict of interest here as your business partner-trustee owes a fiduciary duty to your children or heirs. However, this fiduciary duty may get clouded by a business deal related to the jointly owned business.
Corporate Trustee
Corporate Trustees are professionals/institutions whose job it is to serve as trustee of a trust. Traditionally, most banks have “Trust Departments” that act as trustee for estates. Often, this option is the best choice.
It is a pretty solid guarantee that the corporate trustee will follow your wishes to a “T,” in an efficient manner. Hiring a corporate trustee reduces the possibility of family arguments between family members.
Picking your trustee is the most important decision you will make when setting up your trust. Spend some time, evaluate the people you are considering for the job, and talk to them to make sure they are up for the task.
