who can be a trustee of a trust

Almost anyone you trust, who is over the age of 18, can be your Trustee. Friends/Family - This is a common route, but also comes with the potential for family drama and even resentment. However, if you have a friend or family member whom you trust, the peace of mind this option offers can be worth it.

Full Answer

Can a person be their own trustee?

You can name yourself as the trustee of your revocable trust. One of the key benefits of a revocable trust is the control it offers you over your assets. In more complicated kinds of trusts, the trustee — the person responsible for overseeing the assets in a trust — is usually a bank or an attorney, but most people choose to be their own trustee.

Who should be named as your trustee?

When you set up a revocable living trust, you name someone to be trustee of your trust. Most people are their own trustees so they can continue to handle their assets and financial affairs just as they always have. Many married couples, especially those who have been married for some time and own their assets together, are co-trustees.

What are the responsibilities of a trustee?

• Fiduciary Responsibility. As a trustee, you stand in a "fiduciary" role with respect to the beneficiaries of the trust, both the current beneficiaries and any "remaindermen" named to receive trust ...
• The Trust's Terms. ...
• Investment Standards. ...
• Distributions. ...
• Accounting. ...
• Taxes. ...
• Delegation. ...
• Fees. ...

How to choose a trustee of a trust?

“You need someone with good, basic business sense, and if you have a trust, I prefer someone who’s going to be conservative in managing the trust’s money,” says Thomas Taneff, an estate-planning lawyer in Columbus, Ohio. “Choose someone who has good judgment and common sense.

Can a trustee also be a beneficiary?

The simple answer is yes, a Trustee can also be a Trust beneficiary. In fact, a majority of Trusts have a Trustee who is also a Trust beneficiary. Nearly every revocable, living Trust created in California starts with the settlor naming themselves as Trustee and beneficiary.

Who is the best person to be a trustee?

Most people choose either a friend or family member, a professional trustee such as a lawyer or an accountant, or a trust company or corporate trustee for this key role.

Can a trustee withdraw money from a trust?

So can a trustee withdraw money from a trust they own? Yes, you could withdraw money from your own trust if you're the trustee. Since you have an interest in the trust and its assets, you could withdraw money as you see fit or as needed. You can also move assets in or out of the trust.

What a trustee Cannot do?

The trustee cannot grant legitimate and reasonable requests from one beneficiary in a timely manner and deny or delay granting legitimate and reasonable requests from another beneficiary simply because the trustee does not particularly care for that beneficiary. Invest trust assets in a conservative manner.

What are the benefits of being a trustee?

Trustees are entitled to compensation for the work they do, but that's the extent of a Trustee's financial rewards from acting as Trustee. Trustees also undertake all the work of managing the Trust assets. Some assets are easy to manage, such as cash in a bank account, or a small stock portfolio.

Why do people want to be trustees?

Being asked to serve as the trustee of the trust of a family member is a great honor. It means that the family member trusts your judgment and is willing to put the welfare of the beneficiary or beneficiaries in your hands. But being a trustee is also a great responsibility.

Who controls the money in a trust?

TrusteeA Trust Fund is a legal entity that contains assets or property on behalf of a person or organization. Trust Funds are managed by a Trustee, who is named when the Trust is created. Trust Funds can contain money, bank accounts, property, stocks, businesses, heirlooms, and any other investment types.

What expenses can be paid from a trust?

Examples include the following.Tax preparation fees for estate and trust tax returns (1041)Attorney fees.Trustee fees.Management and maintenance of property expenses (discussed below)Investment advisory fees specific to the estate or trust.More items...•

Do I pay tax on money received from a trust?

Trust beneficiaries must pay taxes on income and other distributions that they receive from the trust. Trust beneficiaries don't have to pay taxes on returned principal from the trust's assets. IRS forms K-1 and 1041 are required for filing tax returns that receive trust disbursements.

Who has more power executor or trustee?

The main difference is that the trustee is the person responsible for making the decisions that maintain the estate whilst it is held on trust before it is given to the beneficiaries, and the executor is the person that carries out (or executes) the actions in the Will eg applying for probate.

Is there any downside to being a trustee?

The negatives for appointing a relative as a trustee are lack of expertise investing money. This could lead to losses if the person tries to beat index funds by day trading or moves all assets into one investment like gold. Family conflict is another risk.

Who owns the property in a trust?

TrusteesTrustees. The trustees are the legal owners of the assets held in a trust. Their role is to: deal with the assets according to the settlor's wishes, as set out in the trust deed or their will.

Should your financial advisor be your trustee?

Trusted Advisors Attorneys, accountants and financial advisors often have unique relationships with their clients and may be suited to serve as trustee of a trust since they should understand you and your estate nearly as well as you do.

When selecting a trustee you should consider her?

How to Choose Your Trustee: Six Key ConsiderationsCosts. People often believe that individual trustees are cheaper than institutions. ... Ability to Make Difficult Decisions. ... Recordkeeping and Reporting. ... Safeguarding Assets. ... Acceptance of Liability. ... Service Consistency.

How do you name a successor trustee?

It's perfectly legal to name a beneficiary of the trust (someone who will receive trust property after your death) as successor trustee. In fact, it's common. EXAMPLE: Mildred names her only child, Allison, as both sole beneficiary of her living trust and successor trustee of the living trust.

Do banks act as trustees?

A bank can act as the Trustee of California's Trust and charge a fee for its corporate trustee services.

What are the factors to consider when naming a trustee?

There are many factors to consider in naming a trustee: First, the name says it all: trustee – Does the trustor trust the individual?

What is the legal requirement for a successor trustee?

In addition to the legal requirements, the Successor Trustee must also notify all financial institutions of the Trustor’s death, gather all assets, sell the personal property, sell the real property, pay all debts of the estate, file any tax returns and pay any taxes and trust administration fees from the trust estate. Once the above legal requirements are complete, the Successor Trustee is required to prepare an accounting of the trust and finally distribute the assets of the trust estate in accordance with the terms of the trust.

What happens after a trustor passes away?

After a trustor passes away, the Successor Trustee will administer the trust estate and distribute the assets pursuant to the terms of the trust. Provided that the assets are titled in a living trust and properly funded into the trust, no court supervision is generally required. However, there are legal requirements that must be satisfied after the trustor passes away. By no means is this an exhaustive list of the requirements after one passes, but this is a basic outline for a Successor Trustee.

What is trustee 101?

Trustee 101: Being a Trustee of a Trust. Being a trustee of a trust can be a thankless job. Many people who are named as a Successor Trustee upon the death or disability of a Trustor want guidance on how to proceed with the trust administration. This article serves to assist in explaining the role and duties of the trustee.

What is the responsibility of the successor trustee?

As such, the Successor Trustee must always keep the beneficiaries reasonably informed about the expenses, income, distributions, etc. from the trust and avoid taking any action that would create the appearance of exercising discretion in favor of himself or herself.

How long does a trust have to be contestable?

Upon receipt of the notification, all beneficiaries and heirs have 120 days to contest the terms of the trust. The Successor Trustee cannot administer the trust until all beneficiaries have waived the period to contest or the 120 day period has elapsed. Upon the death of the trustor, the decedent’s Social Security Number is no longer used.

What is the role of a successor trustee in a trust?

Once the above legal requirements are complete, the Successor Trustee is required to prepare an accounting of the trust and finally distribute the assets of the trust estate in accordance with the terms of the trust. A Successor Trustee acts in a fiduciary capacity and must act in the best interest of the beneficiaries.

What is the role of a trustee?

The role of a trustee. The trustee you select will be legally bound to manage the trust in accordance with the terms of the trust document and to always act in your and your beneficiaries’ best interests.

Can a trustee be a family member?

Bank Private Wealth Management. “Designating a trustee is one of the most important financial decisions you’ll make. Naming a trusted family member has some advantages, but a corporate trustee has expertise that a family member typically doesn’t have . That’s why it’s essential to assess all of your options.”

Is being a trustee a responsibility?

Serving as a trustee is a serious responsibility — which is why it’s smart to consider taking advantage of professional expertise in the form of a corporate trustee. “A corporate trustee has significant expertise and resources, including a deep understanding of fiduciary requirements and extensive investment management experience,” Ross explains.

What does a trustee do in a living trust?

The trustee basically does what you do right now with your financial affairs—collect income, pay bills and taxes, save and invest for the future, buy and sell assets, provide for your loved ones, maintain accurate records, and generally keep your financial matters in good order. ...

Do you have to be your own trustee if you die?

However, you don’t have to be your own trustee.

Can you name someone other than your spouse?

This is often a good choice if you have no children or other trusted relatives living nearby, your other candidates do not have the time or ability to manage your trust, or if you do not have the time, desire or experience to manage your investments yourself. You can also name someone other than your spouse (including a professional) ...

Can you name someone other than your spouse as a co-trustee?

You can also name someone other than your spouse (including a professional) to be co-trustee with you. This would eliminate the time a successor trustee would need to become knowledgeable about your trust, its assets, and the needs and personalities of your beneficiaries.

Can a spouse be a trustee of a living trust?

You can be trustee of your own living trust. If you are married, your spouse can be trustee with you. Most married couples who own assets together, especially those who have been married for some time, are usually co-trustees.

Who can act as trustee for a trust?

Similar to an executor, you can request professionals to act as trustees, such as an accountant or lawyer. As the case with many professionals, they may require a fee for their services. Choosing one or more trustees may depend on the size and nature of the trust.

What is the role of a trustee in an estate?

The trustee has broad responsibilities in managing the affairs of a trust , and thus plays an important role in your estate plan. Here's what they do. Menu burger. Close thin. Facebook.

What is the fiduciary standard?

The fiduciary standard requires that the trustee pay closer attention to the investments and assets of the trust than their own accounts. Asset and Property Management. Beyond the fiduciary standard, a trustee may need to oversee bank accounts, file tax returns, and pay bills and expenses.

How old do you have to be to be a trustee?

There are very few qualifications required to serve as a trustee. A grantor can appoint someone a trustee as long as the individual is at least 18 years old and is not likely to become bankrupt or mentally incompetent. Grantors can also be the trustee themselves, as long as the trust is a revocable living trust.

What is the duty of a trustee?

One of the most critical responsibilities of a trustee is the fiduciary or loyalty duty. A trustee must put the interest of the trust above all others. The fiduciary duty obligates a trustee to maintain five essential responsibilities: Protect and preserve the trust’s property and assets.

What does a trustee do when making distribution decisions?

Trustees need to evaluate the beneficiaries’ needs, other sources of income and responsibilities to the other beneficiaries. Often, the trustee must set limitations and boundaries on the use of all trust assets. Taxes.

What is trustee in bankruptcy?

Ashley KilroyJun 28, 2019. Share. A trustee is the individual appointed to administer assets or property for the benefit of a third party. A trustee could be appointed for the purpose of bankruptcy, a charity or certain kinds of retirement plans, but the most common is a trust. A trust is a legal agreement designed to control how an individual ...

Why do you name a beneficiary as trustee?

For one, it is convenient. A trust's beneficiaries are usually known, loved, and trusted by the trustmaker, so it makes sense to select one of the beneficiaries as trustee. Also, a trustee-beneficiary has a vested interest in ensuring that the trust is administered in accordance with the trustmaker's intentions because it benefits them, though this might be less true if the beneficiary is unhappy with their portion of the trust proceeds.

How to avoid conflict with beneficiaries?

Beneficiaries who do not know what a trustee is doing will often jump to the worst possible conclusion. A trustee who is a beneficiary can avoid conflict with the other beneficiaries by being up-front and open about their actions.

Do trustees have fiduciary duties?

All trustees owe fiducia ry duties to the beneficiaries of a trust, which means that the trustee must act in the best interest of the trust beneficiaries and ensure that the trust is administered according to its terms and the intentions of the trustmaker. Normally, trustees cannot use the money and property in the trust to benefit themselves. The obligation to act in the best interest of the beneficiaries becomes fuzzier, however, when the trustee is also a beneficiary. A trustee-beneficiary can successfully navigate these potential pitfalls by following a few simple guidelines.

Can a child be a trustee of a revocable trust?

The short answer is yes, a beneficiary can also be a trust ee of the same trust —but it may not always be wise, and certain guidelines must be followed.

What is the role of a trustee in a trust?

A trustee's duties may include monitoring the trust's investments, making sure paperwork and tax forms are correctly filed, and distributing the property to beneficiaries. In more elaborate trusts that involve hedge funds and other complex investment tools, several trustees are often enlisted to divvy up the duties, reports The Wall Street Journal. For instance, one trustee could be hired to manage the money, another to direct investments, a third to make sure the trust complies with the law, and a fourth to distribute the money to beneficiaries.

How many trustees can a trust have?

While there's no limit to how many trustees one trust can have, it might be beneficial to keep the number low. Here are a few reasons why:

What is a trustee's duty?

A trustee has a fiduciary duty, meaning he or she must act solely in the best interests of the beneficiary (or beneficiaries). If a trustee doesn't live up to this duty, he or she can be held legally accountable. For example, the beneficiaries can get a trustee removed and even sue a trustee if he or she misappropriated assets.

What is a trust in estate planning?

Trusts are estate planning tools that can be used to manage how a person's property is distributed after death, without going through probate. Trustees play an important role in protecting the beneficiary's (or beneficiaries') interests.

Can a trustee abuse their power?

Trustees' potential abuse of power. Although trustees have to act in the best interests of the beneficiaries, there are some trustees that end up neglecting the trust or use their power to benefit themselves. If you have too many trustees, it may be hard for you to manage or figure out which trustee is breaching their duties to the trust.

What happens when a beneficiary receives a foreign trust?

When a US beneficiary receives distributions from a foreign trust, the beneficiary will be taxed to the extent that any trust income, including foreign-source income and capital gains, is included in the distribution. In the usual circumstance, under the tax rules, non-US source income and realized capital gains are not deemed to comprise any part of a trust distribu­tion to a beneficiary unless that income is specifically allo­cated to the beneficiary. One of the big negatives with the foreign trust rules is a change to this tax treatment. When paid from a foreign trust, any income from non-US sources, as well as capital gain income, are deemed under the tax laws to be part of any taxable income distributed to a US beneficiary.

What are the reporting obligations for foreign trusts?

Significant reporting obligations are triggered with “foreign” trusts. Hefty pen­alties are imposed for failure to comply. For example, a US beneficiary who receives a distribution from a foreign trust but fails to file Form 3520 (“Annual Return to Report Transactions with Foreign Trusts”) can be charged with a failure-to-file penalty equal to 35 percent of the gross distribution. My earlier blog posts explain in detail the filing requirements with respect to “foreign” trusts. My blog post here covered the US tax filing and reporting requirements for US grantors to foreign trusts, and this post provided a summary of relevant US tax filings imposed on the foreign trust’s fiduciary or trustee; my post here looks at the rules with respect to filings required of the US beneficiary of a foreign trust

Is a trust a US person?

Any trust that is not a US person will be treated as a “foreign” trust.

Can a domestic trust be a foreign trust?

The IRS has recognized that a domestic trust can inadver tently become a foreign trust due to changes in the identity of the trust­ee and relevant treasury regulations (see section (d) (2)) provide a cure. Under the regulations, a 12-month grace period is granted within which an unintentional conversion to “foreign” status can be cured (e.g., the trust can replace the foreign trustee with a US trustee). Please note that a change of trustee due to removal or appointment is not considered to be inadvertent/unintentional under the regulations. Under the regulations, an inadvertent change means the death, incapacity, resignation, change in residency or other change with respect to a person that has a power to make a substantial decision of the trust that would cause a change to the residency of the trust but that was not intended to change the residency of the trust.

Can a non US citizen be a trustee?

Since “all” substantial decisions must be made by a US person, choosing a non-US family member ( i.e., a non-US citizen or foreign national who is a non-US resident) as trustee will mean the trust will fail the control test. As such, the trust will be treated as a “foreign” trust. Remember if a foreign person has control over only one “substantial decision,” foreign trust status will result.

Is a foreign foundation a trust?

Last but not least, foreign “foundations” are often treated for US tax purposes as a foreign “trust”. These entities share characteristics of both a corporation and a trust. They can offer greater stability and protection of assets and are becoming more and more popular as estate planning and asset protection vehicles.

Can a trust be domestic?

Many parents establish a trust for their children and intend that the trust be a domestic (US) trust. Often, this will be a testamentary trust. That is, one that comes into being upon death of the testator, created pursuant to a Last Will & Testament. Many parents struggle with the decision as to who to appoint as the trustee for their children’s trust. The choice becomes particularly tricky when family members are living outside the US, or when they are non-US citizens. In today’s global economy, this scenario is becoming more and more common. Let’s look at the issues and see why selecting a “foreign” family member may be problematic.

The Role of A Trustee

See more on usbank.com

Selecting An Individual Trustee

Selecting A Corporate Trustee

Selecting Co-Trustees