Responsibilities of a Trustee

Over time, trusts have become longer and more complex, making the decision of choosing a trustee even more important. The responsibilities of a trustee are complicated, time-consuming and critical to the trust itself. If a friend or family member asks you to be a trustee, it is necessary to understand these duties before filling that role.
 

Fiduciary Responsibility

In the role of fiduciary, the trustee is held to a very high standard, meaning that he or she must exercise more care with attention to the trust investments and disbursements than the trustee would with his or her own accounts.
 

Investments Standards

Investments of the trust funds must be prudent and must take into account the needs of both current and future beneficiaries, by investing to generate immediate income or investing for growth further down the line.
 

The Trust’s Terms

Understanding the trust’s terms is vital to following its directions, such as when and how to distribute income and principal or what reports you need to make for beneficiaries.
 

Accounting

The trustee must keep track of all income, distributions from and expenditures by the trust. All account information must be provided to the beneficiaries on an annual basis.
 

Taxes

Depending on whether the trust is revocable or irrevocable, the trustee will have to file an annual tax return and pay taxes.
 

Distributions

Distributions to beneficiaries need to be evaluated based on several factors, such as need and income, as well as how it affects the other beneficiaries. A trustee has to have the ability to say “no” when it benefits the trust.

The trustee has the right to delegate some of these responsibilities to financial advisors, lawyers and accountants; however, all discretionary decisions must be made by the trustee. In addition, because of the nature of the role and the level of time and consideration it requires, the trustee is entitled to a fee for their services.

We do not provide legal or tax advice. Please consult your legal or tax advisor in regards to your own situation.

Financial products made available or recommended by Fidelity Bank that are not bank deposits are not insured by the FDIC; are not a deposit or other obligation of, or guaranteed by, Fidelity Bank; and are subject to investment risks, including possible loss of the principal amount invested.