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The Heritage Law Center, LLC Blog

What to Do if You’re a Trustee

POSTED ON: September 9, 2020

So, you’re a trustee of a Massachusetts trust. On one hand, the good news is the person who created the trust respects you and finds you to be a trustworthy person. On the other hand, you have a mighty responsibility to manage that trust. But don’t worry, because with the right information and guidance from a good advisor, you can do a good job.

Tips to get your started:

  1. Review the trust document. The trust outlines the rules you need to follow, so you should be familiar with its terms. If you don’t understand your responsibilities under the trust, ask an estate planning attorney to explain them to you.
  2. Open a trust checking account. Your local bank can explain what you need to create a trust account. All income and expenses of the trust should go through this account. While you can and should invest trust money, a checking account will enable you to make distributions and payments and keep track of them.
  3. Keep the best interests of the beneficiaries in mind at all times. As a trustee, you have a fiduciary duty to exercise good faith and act for the benefit of the trust’s beneficiaries. Trustees who act adversely to a beneficiary’s interests may be open to liability.
  4. Don’t have any personal financial dealings with the trust. Never forget that the contents of the trust belong to the beneficiaries; you’re just managing those assets. You don’t have the right to borrow money from the trust or lend the trust money to anyone. You need to keep your personal finances separate from the trust at all times.
  5. Provide annual accounting to beneficiaries. You should update beneficiaries and anyone else indicated in the trust with an annual statement of trust activity. This can be a copy of the checking and investment account statements or a more formal trust account document prepared by an accountant or attorney.
  6. Invest trust funds prudently and productively. You shouldn’t leave trust funds in a savings account or invest them into some exciting new company. Trust assets must be invested in a conservative manner, in a way that will result in reasonable growth with minimum risk. Often, it’s a good idea to seek professional investment advice.
  7. Keep in regular contact with the beneficiaries to understand their needs and be responsive to them.
  8. Make sure you’re aware of any public benefits that trust beneficiaries may be receiving and make certain you don’t jeopardize the beneficiaries’ eligibility. In some cases, if a beneficiary is receiving public benefits and they get a poorly-timed trust disbursement, they could be disqualified from receiving public benefits that they desperately need.
  9. File annual income tax returns for the trust. This isn’t required for most grantor trusts, where the taxes flow through to the creator of the trust to report. But when you inherit the role of Trustee after a grantor passes, taxes must be filed when trust income is over $600 per year.
  10. Don’t do it alone. Get professional advice to make sure you’re correctly fulfilling your role. You can consult a Massachusetts estate planning attorney to get guidance, and connect with specialists who do accounting and investing to help you with the trust.

As a Massachusetts trust administration attorney, I have extensive knowledge about trust administration and can guide you to ensure that you are administering the trust properly. Contact us today at info@maheritagelawcenter.com or 617.485.0383 to set up a free, confidential consultation.