Responsibilities and Duties of a Trustee

The Responsibilities and Duties of a Trustees can range from taking control of all assets comprising an estate or trust and sending tax returns. One of the greatest compliments a person can pay you is to nominate you as the trustee of their trust. With this position comes a great deal of trust (no pun intended) and responsibility. Let us explore what all this entails…

It is the fiduciary’s responsibility to take control of all assets comprising an estate or trust. Especially when a fiduciary assumes office at the grantor’s or testator’s death, it is crucial to secure and value all assets as soon as possible. Some assets, such as brokerage accounts, may be accessed immediately; others, such as insurance, may have to be applied for by filing a claim. The fiduciary also must value financial assets, including bank and securities accounts. It is that fiduciary’s duty to determine when bills unpaid at death should be paid, and then pay them or notify creditors of temporary delay. In some cases, such as property or casualty insurance bills or real estate taxes, the estate may be harmed if the bills are not paid promptly. So as you can tell, entrusting someone in that position requires a great deal of faith in you.

The fiduciary is responsible for a number of tax returns. First are the personal returns of the decedent: the final income tax return for the year of the decedent’s death; a gift or generation-skipping tax return for the current year, if needed; and prior years’ returns that may be on extension all may need to be filed. There are other technical issues to think about when one is a trustee. Since the estate or trust is also a taxpayer in its own right, a new tax identification number must be obtained and a fiduciary income tax return must be filed for the estate or trust as well. It is important to note for planning that the estate or trust and the beneficiaries may not be in the same tax brackets. Thus, timing of certain distributions can save money for all concerned. Most expenses that a fiduciary incurs in the administration of the estate or trust are properly payable from the decedent’s assets. These include funeral expenses, appraisal fees, attorney’s and accountant’s fees, insurance premiums, etc.

Careful records should be kept and receipts should always be obtained. Wills and trusts often provide for specific gifts of cash or property before the balance, or residue, is distributed. The residue may be distributed outright or in further trust, such as a trust for a surviving spouse or for minor children.