Understanding Your Role As Trustee For Your Parents' Trust
Sometimes, parents create multiple trust accounts for different purposes, naming different trustees for each one. Even if you've received an inheritance from your parents, you may find that they've assigned you as trustee for another beneficiary's trust. If this happens, it's important you understand exactly what that means for you. After all, if you've never had to deal with a trust before, the whole process may seem daunting and unfamiliar. If you want to be sure you are successfully meeting all of the responsibilities of your role, there are a few things that you can do. Here are some tips to help you understand and live up to the responsibilities set forth for you as the trustee.
Read the Trust Document
The trust document is something that your parents drafted with the help of an elder law attorney. It's probably the best place for you to start because it will detail all of the rules and expectations that your parents have for you as you manage the trust. If there's something in the document that you don't understand, talk with the attorney who helped create it for some clarification.
Establish a Separate Account
You'll find it easier to manage, report on and account for the funds in the trust if you establish a separate checking account for it. All of the trust-related financial activity should go through this account.
Act on Behalf of the Beneficiaries
Remember that as the trustee, it is your responsibility to act in the best interest of the beneficiaries. Keep their interests in mind at all times when making decisions about financial management.
Keep It All Professional
Although you have access to it, don't use the funds in the trust for anything personal. Remember that every expenditure from the trust is supposed to be directly related to the estate, the beneficiaries and their needs. It also means you can't lend money to anyone out of the trust.
Create Annual Statements
One of the most important things to remember as a trustee is that the beneficiaries and any other people named in the trust should receive regular statements that detail the activity in the account. You can produce annual statements that clearly illustrate how much was spent, what it was spent on and what's left in the account. You may also find that the beneficiaries want more frequent information, which may mean creating quarterly statements instead.
Be Attentive to Investments
As the trustee, it is also your responsibility to seek investment opportunities for the funds. However, there should be a balance between being proactive about investing and being reckless. Make sure that you're choosing productive, logical investment opportunities so that the funds are growing, not diminishing. You may find that you need to seek professional investment advice, but the goal is to diversify the investments. You may even want to talk with the elder law attorney your parents worked with to see if they had any wishes for the fund investment.
For more information on elder law and estate planning, contact a lawyer like James M Snow who specializes in that area of law.