As a trustee, you hold a position of great responsibility, overseeing and managing assets on behalf of others. Upholding your fiduciary duty is essential to maintain the trust and confidence of the beneficiaries and ensure the proper administration of the trust.
Being named as a trustee does not necessarily come with a handbook on how to uphold your duties, though. That is why there are a few key responsibilities you should understand as someone who holds fiduciary duty regarding a trust.
Follow the trust document
The trust document outlines the specific terms and conditions governing the trust. It is your duty to adhere to these terms diligently and without deviation.
Exercise due diligence
As a trustee, you are responsible for managing and investing trust assets wisely. If the trustor wishes to use the trust as a way to grow their assets, you must oversee the process with due diligence. Conduct thorough research and make informed decisions regarding the diversification of investments.
Keep beneficiaries informed
Regularly communicate with beneficiaries regarding the trust’s financial status and any significant developments. Transparency builds trust and helps manage expectations.
When it comes time to distribute trust assets, treat all beneficiaries fairly and without favoritism. Your duty is to act in the best interests of the trust as a whole, rather than benefiting one beneficiary over another.
As many as 67% of Americans have no estate plan, but for those who do, including a trust can be a prudent financial decision. When someone sets up a trust, though, there is a responsibility to ensure that both the trustor and trustee understand the extent of their fiduciary duties.