One of the most important things a person can do when acting as a fiduciary for a trust is understand what’s involved in the role. It’s more than signing a few pieces of paper, and there are actually many challenges to overcome when taking the position. It’s not an impossible task, but it takes some work to manage properly.
If you are soon to appointed as a fiduciary for a trust, make sure you a prepared for the duties and responsibilities of the position.
What is the Authority and Duties of a Trustee?
The authority and powers of a fiduciary can vary from state to state but, in most cases, the main powers a fiduciary has come from one place: the documentation of the trust. The first challenge a fiduciary needs to overcome is understanding what, according to the trust, is expected of them.
Depending on the type of trust you are working with, there may also be court supervision involved. Whether the rules are coming from the court or the trust document, it’s imperative that fiduciaries fully understand what they can and cannot do.
Some of the many details that include:
- How the money should be spent/distributed.
- Which beneficiaries receive assets and when.
- The duration of the trust. Does it end, and when?
- If the trust closes on a certain date, what are your responsibilities to close it out?
Everything you need to know should come from either the court or the trust documents. If you are unsure about something, consult with the court or an attorney to help you interpret the instructions within the trust.
Working with Beneficiaries
Many fiduciaries will tell you that some beneficiaries can be easy to work with while others, not so much. Every beneficiary will have their own expectations and desires, and some are very vocal about them. What’s important to remember is that neither you nor the beneficiaries make the rules of the trust.
If the trust gives money out every so often, but some beneficiaries want it more often, it’s incumbent upon you to stick to the schedule and distribution amounts detailed in the trust.
The best thing you can do is keep a record of key dates and stick to the schedule of making distributions, etc.
Bookkeeping
If the trust is court supervised, you will likely be required to keep records of spending/distributions so that the court can approve of your actions. Take the time to keep an organized record of the fiduciary actions (and dates) you take that are related to the trust. Stay organized, and the process will be much less of a challenge.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.