Being named a successor trustee in someone’s trust is a great honor and an even greater responsibility. Being a trustee means that someone has faith that you can and will skillfully and ethically manage their estate once they pass. You will be responsible for managing the trust and all its assets for the benefit of the named beneficiaries. It is essential that you perform your duties with care and diligence.
At Robbins Estate Law, we have an in-depth understanding of the responsibilities of managing a trust. We regularly work with trustees, giving them the tools to prioritize and perform their duties effectively. If you manage a trust on behalf of others, you do not have to do it alone. Contact us today to talk with a Texas trust administration attorney.
What Does It Mean to Administer a Trust?
There are three primary parties involved in a trust. The grantor creates and funds the trust. Beneficiaries are the person or entity that benefits from the trust assets. The trustee administers the trust on behalf of the beneficiaries.
While administering the trust, the trustee must hold, manage, and administer all of the assets in the trust. The specific day-to-day duties of a trustee can differ based on the documents creating the trust. However, most trustees have similar responsibilities.
In every case, the trustee is ultimately responsible for running the trust and distributing its assets. These responsibilities include paying taxes and debts on trust assets, making investment decisions, managing properties in the trust, and anything else the trust might require.
Responsibilities of a Trustee
Trustees have the most involvement in the day-to-day operation of a trust and thus have many responsibilities. The powers of a trustee are laid out in Texas Trust Code § 113 Subchapter A. Understanding these responsibilities is a key factor in the successful administration of a trust.
Maintain the Trust’s Documents
First, a trustee is responsible for collecting and maintaining all the documents related to the trust. These documents often include a last will and testament, deeds and titles for assets, and trust documents. The trustee can keep and maintain them personally or through a Texas trust administration lawyer.
Identify and Maintain Trust Assets
Upon being named the trustee, one of the first tasks is to identify all the trust assets and ensure they are accounted for. You will be responsible for maintaining a detailed accounting of these assets throughout the life of the trust. Identifying assets that should be in the trust but were never transferred into it is also essential—but be aware that bringing these assets back into the trust might require going to probate court. A trust administration attorney in Texas can help you recover such assets.
Understand and Execute the Trust’s Purpose
A trustee must have an in-depth understanding of the purpose of the trust. This understanding can be achieved by carefully analyzing the trust documents. Once you understand the purpose, you have a duty to execute it on behalf of the beneficiaries.
Manage the Trust’s Debts
Managing the trust’s debts can be one of the most challenging aspects of being a trustee. Managing debts does not simply mean paying them. Sometimes beneficiaries can hold a trustee liable for paying debts that the trustee should have disputed instead. It is critical to carefully consider every debt and ensure it is legitimate before paying it with the trust’s assets. Trustees must also ensure that the trust pays all of its taxes.
Manage Trust Assets
A trustee also must diligently manage the trust assets. This responsibility includes making investment decisions and managing the trust’s real properties. It also includes distributing assets to beneficiaries in accordance with the trust’s purpose.
Duties of a Trustee
While carrying out their responsibilities, a trustee should keep their legal duties in mind. In Texas, trustees are fiduciaries. As a result, they are subject to fiduciary duties. A failure to live up to these duties can result in a court holding the trustee liable for the breach. A trustee in Texas must uphold the duty of care, loyalty, prudence, disclosure, and the duty to act in good faith.
Duty of Care
The duty of care requires that a trustee manage the trust as a reasonably prudent person would under the circumstances. For example, when investing assets, the trustee should make decisions as a reasonably prudent investor would.
Duty of Loyalty
The duty of loyalty demands that the trustee manage the trust for the sole benefit of beneficiaries and refrain from pursuing personal benefits from the trust’s assets.
Duty of Prudence
Under the duty of prudence, a trustee must manage a trust with a reasonable degree of care, caution, and skill.
Duty of Disclosure
The duty of disclosure puts a responsibility on the trustee to inform all beneficiaries of the existence of the trust. The trustee must also maintain an accurate accounting of all the trust’s assets and transactions that the beneficiaries can access.
Duty of Good Faith
Finally, the duty of good faith requires that the trustee manage the trust in the best interests of the beneficiaries. The trustee must also strictly follow the terms of the trust.
How to Avoid Liability As a Trustee
The best way to avoid personal liability as a trustee is to understand and internalize the fiduciary duties trustees are subject to. One best practice is keeping well-organized and accurate records of every transaction. The records should include the reason for the transaction in addition to other details. A trustee should also fully understand the documents within the trust and obey them as closely as possible. Additionally, a trustee should act carefully and diligently while performing all their trust-related duties.
Finally, working with a trust administration lawyer in Texas can help a trustee make the best, legally defensible decisions. Most trustees are entitled to hire an attorney who will work for the trust and be paid with funds from the trust. The attorney will assist the trustee in the administration of the trust.
Robbins Estate Law Can Help
If you have been tasked with administering a trust, Robbins Estate Law is here to help. We work closely with trustees to effectively carry out the trust’s purpose. Our firm can help you navigate the complexities of trust management while protecting yourself from potential liabilities. Contact Robbins Estate Law today to schedule a consultation.