While trustees have several duties and responsibilities, there is one that is the most important: Be loyal.
Trusts are created to preserve assets for the benefit of beneficiaries. A trustee is selected to administer a trust pursuant to its specific terms. The trustee is tasked with managing the trust’s assets in the beneficiaries’ best interests and has a legal and fiduciary duty to said beneficiaries.
Duty of Loyalty
Above all else, a trustee must administer a trust with “undivided loyalty to and solely in the best interests of the beneficiaries,” according to New Jersey state law. (Most states have similar laws.) Any transaction involving the trust property that the trustee makes must not be for the trustee’s personal gain or create a conflict between the trustee’s duties to the beneficiaries and the trustee’s personal interests. This prohibition extends to the trustee’s family or any other person or entity that could stand to benefit from the transaction. The latter could include accountants, attorneys, or even a company.
A trustee must be able to show loyalty to the beneficiaries and their interests and that the trustee’s judgment is not being influenced by his or her own interests, or anyone else’s, besides the trust’s beneficiaries. There are steps that can be taken to ensure a transaction is not rendered void for conflict, such as seeking a court approval or the beneficiaries’ consent before the transaction is commenced.
Other Duties and Responsibilities
The trustee role includes many legal and fiduciary responsibilities:
- Upon assuming the trustee role, ensuring the trust’s assets are safe and under the trustee’s control
- Ensuring the trust’s terms are understood and who the trust’s beneficiaries are
- Ensuring all past account records are in order
- If applicable, investing the trust’s assets for the benefit of current and future beneficiaries
- Administering the trust per its terms, including distribution of assets to beneficiaries in accordance with the trust agreement
- Making tax decisions and keeping and preparing records, statements and returns
- Keeping the beneficiaries apprised of the trust’s status with regular communications and sharing statements and reports
Being selected to serve as a trustee comes with many responsibilities that can be complex and time consuming. There are options to help administer a trust. Contact us at 856.782.8450 to schedule a call to discuss the trustee’s duties and responsibilities and the options available to help administer a trust.