How Do I Prepare My Trustee to Manage My Trust?

Senior Father Talking to Adult Son Successor Trustee on Couch

When you create a living trust, most of the time you serve as the trustee during your lifetime, with a successor trustee taking over upon your death. Depending on the terms of the trust document, the trustee may distribute trust assets shortly after your death, or may manage them for years, making distributions as you specified when creating the trust.

Most people who create trusts do so because they don't want to leave the management and distribution of their assets to chance. That being so, it's astonishing how often people put no thought into preparing their trustees to manage this important responsibility. If you have a trust, or are considering creating one, you'll want to consider whether you've taken these important steps.

Choose the Right Trustee and Give Them Information

This may seem obvious, and it should be. It's right there in the name: the trustee is someone in whom you are placing tremendous trust. This is far from an honorary position. Don't choose someone for the job that you think would be hurt not to be chosen. Choose someone capable of understanding and carrying out your instructions for management of the trust, and of course, someone whose ethics are beyond reproach.

Once you have chosen a diligent, reliable trustee, give them the foundation they will need to carry out your wishes. While the trust document will provide some specific instruction, it is very helpful for your trustee to have the background that can only come from talking with you and getting a firsthand understanding of your goals and intentions. Depending on the complexity of the trust, it may also be helpful to include your estate planning attorney in the conversation.

When the day arrives that your successor trustee has to take over administration of the trust, they will not only have the instructions provided in the trust document, but a deeper understanding of what those instructions are intended to achieve. If you've introduced your trustee to your estate planning attorney, they'll also have a trustworthy resource to assist them in the trust administration.

Give Your Trustee Tools for Trust Management

Since your trustee is charged with efficiently managing the trust's assets, a nudge in the right direction can make it easier for them to do so. For instance, if they open a checking account on behalf of the trust, all funds that go into or out of the trust can go through that account, providing ready documentation of income, expenses, and distributions.

This can also make it easier for the trustee to prepare an annual account of trust activity and assets to the beneficiaries. An accounting may be required by law, but even if it is not, the transparency will bolster the beneficiaries' confidence in the trustee and their understanding of the trust's operations. The more contact the trustee has with the beneficiaries, the better he or she will understand whether trust distributions are meeting their needs.

Perhaps the best tool you can offer your trustee to make their job easier is to connect them with resources who can advise and direct them. This can include the attorney who prepared the trust, as noted above. It may also mean introducing them to other trusted professionals, such as a CPA or tax preparer. Because the services of these professionals confer a benefit on the trust and the trust's beneficiaries, they are paid for out of trust funds. Some trustees may not be aware of this, and may be hesitant to request help they need out of needless fear of the expense.

Last but not least, ask your trustee what they need in order to feel comfortable and confident administering the trust. Your trustee is helping not just you, but those you love; you want to make it as easy as possible for them to do so.

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