A living trust is a legal document designed to facilitate the smooth transfer of cash and assets from an estate to beneficiaries. There are many roles in the administration of a trust and disbursement of trust assets. The trustee of a trust is the person responsible for the oversight of all these roles.
The grantor, or creator of the trust, should make the trustee aware of trust assets and goals so that the trustee can best perform his duties. In many cases the grantor and trustee are the same person. In such cases, the trustee must read the estate documents to confirm understanding of the rules outlined in his own document.
The trustee must identify and title all assets named by the trust in the name of the trust. Common trust assets include real estate, stocks and bonds, and bank accounts.
A trustee must manage assets of the trust prudently according to the terms of the trust document. In many cases, the “prudent man” rules apply, meaning that a trustee must prove that he was acting as a prudent person would with assets that don’t belong to him. Trustees are often allowed to hire professionals to oversee the daily details of the trust that may require licenses or expertise, such as financial advisers and accountants.
Acquiring and Selling
The trustee makes purchase and sale decisions on behalf of the trust when specified in the trust document. These must be in line with any instructions presented in the trust.
Separation of Assets
A trustee cannot mingle personal and trust assets at any time. The trustee should have access to separate trust accounts to facilitate any activities on behalf of the trust.
If the grantor—the trust creator--becomes incapacitated, the trust may detail a trustee’s role of using assets to care for the grantor. A trustee may have access to ancillary documents, such as a living will or health care power of attorney, that should be furnished to the attending physician.
The trustee must keep detailed records of activities taken on behalf of the trust, including acquisition and sale of assets, statements of asset growth, and any accounts opened, closed, or transferred on behalf of the trust.