A trust is a legal entity that a person creates to achieve various estate planning goals, such as managing assets, providing legal protections for property, and avoiding probate. There are multiple roles involved with the trust, so it is important to understand how they work. Key definitions include the grantor who creates the trust, the trustee who manages it, and the beneficiary who receives trust proceeds. With many living revocable trusts, all positions are occupied by the same person during his or her lifetime.
Upon the grantor’s passing, the trust agreement includes details on who steps into the roles of trustee and beneficiary. If you take on either of these positions, you will want information on the duties of the successor trustee. The trust becomes irrevocable once the grantor dies, and the trustee has important responsibilities to the beneficiary. In general, a successor trustee must comply with the terms of the trust agreement, but a trusts and trustees attorney can explain some of the specific duties.
Obtain Tax ID Number
When the grantor was alive, he or she may have used a personal Social Security Number for the management of bank accounts and trust assets. The successor trustee should apply for a Taxpayer ID Number (TIN). This is the identifying information the IRS uses for tax purposes, and the trust is an entity that needs one.
Accept Probate Assets
With many trusts aiming for probate avoidance, the grantor creates a pour-over will to deposit any individually owned assets into the trust. It is the successor trustee’s duty to accept these assets and manage them according to the trust agreement until they are distributed to beneficiaries.
Manage Trust Property
The terms of the agreement will typically require specific duties for managing trust assets, such as:
- Insuring trust assets;
- Paying all income, property, and business taxes;
- Collecting rents;
- Investing trust assets; and,
- Maintenance, inspections, and repairs of real estate belonging to the trust.
In addition, the trustee usually has the power to sell real estate and personal property as necessary to protect trust and beneficiary interests.
Pay Creditors
After a person’s death, creditors must file their claims with the decedent’s estate if they want payment. These matters are usually handled through the probate process, but the trustee may be involved if the case closes in a short time. Creditors have two years to file claims, and the trustee has the responsibility to pay those that are verified.
Comply With Fiduciary Duty
A trustee is in the position of a fiduciary, which means putting the rights and interests of the trust entity first. Fiduciary duties include loyalty, avoiding conflicts of interest, good faith in dealing with assets, and confidentiality.
Consult With a Trusts and Estate Planning Lawyer to Learn More
As a successor trustee, it is important to protect yourself against claims that you are not complying with your duties by law and the trust agreement. Guidance from an attorney is crucial, so please contact Francois Williams Legal LLC to discuss details. We can set up a consultation to discuss your situation.
