A trust can be an important part of someone’s old age planning, estate planning, care for a loved one, or personal investment strategy. If you are named the trustee for their trust, you should work with a lawyer to help you do the job justice.
A trustee has a big obligation to act in good faith and carry out a fiduciary duty for the beneficiaries. This is a big responsibility, and our lawyers can help you carry it out. We can answer questions, help you deal with challenges and complaints, and even help you step down and pass the job to someone else if you would prefer.
Call Flake & Flake’s attorneys for trustee representation at (702) 829-5731 for help.
What is the Purpose of a Trust?
The general purpose of a trust is for the original owner (the grantor) to put the money and assets in the trust (the trust corpus) under someone else’s control (the trustee’s control) to pay money to the beneficiaries.
Divides Ownership and Benefit
When you normally own something, you have title to it and the ability to use it, profit from it, or sell it. With a trust, those things are split:
- The trust owns the assets.
- The trustee controls the assets and may have a limited right to dispose of or sell them.
- The beneficiaries benefit from them.
Allows Management for Someone Who Cannot Manage Assets
The biggest reason to use these is to help someone else who cannot be left to control the assets or money themselves. This is commonly used for
- Older adults who can no longer manage their own finances and want to put a trustee in charge rather than using power of attorney documents
- Children who need money managed for them until they come of age, especially if money is given to them in a will
- Disabled people who cannot have the money outright because it would hurt eligibility for Social Security Disability and other programs
- People with substance use or gambling issues who need their assets protected from their vice.
Will Alternatives
Trusts can also be used as “will alternatives” to pass on money when someone dies. Trusts act immediately and do not go through probate, so they can be much quicker and avoid public disclosure of assets.
What is a Trustee’s Job?
The trustee’s basic job is to manage the money and assets in a trust and pay the beneficiaries income from the trust.
Keep the Money Safe
It is your responsibility to keep the money safe, invest it wisely, and avoid drawing down or dissipating the funds, unless the trust documents intend it to be drawn down over time.
Pay Income to the Beneficiaries
You also pay the beneficiaries. This typically comes in the form of income from the invested assets, which may need to be paid out in full every year.
Using Funds for Particular Purposes
Alternatively, trusts may be set up to cover expenses – e.g., paying for a disabled loved one’s medical care – meaning you are the gatekeeper on those funds.
How is a Trustee Different from an Executor?
A trustee and an executor serve similar roles, but in different contexts. Both are responsible for money and assets that might not have belonged to them, but for different purposes.
Death Not Necessarily Involved
Executors are named in a will or set by a probate court, and they only take on responsibilities when someone passes away. Trustees can be used to administer a trust while the grantor and beneficiaries are all still alive.
Executors Go to Probate Court
A trust may be funded through a will, but a trust that is set up before a will does not go through probate. It is a separate entity, separate from the decedent’s estate and does not pass through a will or go to probate court.
Trustee is an Ongoing Role
An executor typically serves in that role long enough to pay the decedent’s debts, assemble their estate, and pay out to the heirs. Then that job ends.
A trustee may continue their job for their lifetime or the lifetime of the beneficiary. The job might even pass to a new trustee when you pass, with the trust continuing on for generations.
How Does a Lawyer Help a Trustee?
Our attorneys for trustee representation can help in a few simple ways:
Advice and Questions
If you are not yourself a lawyer, you might have questions about what you can – and should – do with the money in a trust. We are there to answer questions as they arise, especially if you end up in a confusing situation and need help understanding what to do next.
Going to Court for Legal Issues
If you are ever sued for mismanagement, self-dealing, or other issues, we can defend you and help you settle issues, keep your job as trustee, and move forward with a plan to avoid similar issues going forward.
Can You Be Both an Executor and a Trustee?
If a trust is set up as part of someone’s estate planning, they might name the same person as trustee and executor. This is common when parents leave their eldest child or a sibling to manage their affairs.
Our lawyers also help with probate for people named as executor.
How Do You Administer a Living Trust?
Generally, the person creating a living trust names themselves as trustee and beneficiary. This means they continue controlling the assets and money like nothing changed.
The trustee is typically named as successor trustee to take over in two situations:
- If the trustee becomes incapacitated and needs you to take over managing the trust.
- If the trustee passes away.
Then, you continue to administer the trust according to the instructions provided. Do you pay out incomes? Or do you dissolve the trust and pass everything to the beneficiaries? We can help you find out.
How Do You Administer a Special Needs Trust?
A special needs trust is set up to provide benefits for a disabled loved one who is on Social Security Disability (SSD) or other programs. If they receive too much income or have assets over the SSD limit, they can lose their benefits or get reduced pay from SSD.
As trustee on a special needs trust, you will pay for things like their healthcare as these expenses come up. This might be a lifelong job, caring for a sibling, aunt/uncle, cousin, or other loved one for the rest of their life.
Do You Need to Pay Taxes on a Trust?
Taxes are very specific to the situation at hand, so you should work with an accountant as well as a lawyer to help you with these administration issues.
Do You Get Paid to Be a Trustee?
Generally yes. Trusts typically provide an income for the trustee, but if not, trustees are often allowed to take a reasonable fee.
With very large trusts, being trustee could be a lucrative position.
Call Our Trustee Representation Attorneys in Henderson
Call our attorneys for trustee representation at Flake & Flake today at (702) 829-5731 for a free case review.
