When you create a trust, one of the most important steps is understanding the role of the trustee. This individual - or in some cases, a corporate entity - carries significant legal and ethical responsibility.
The trustee’s primary job is to gather assets, pay bills, and make distributions. They’re bound by what’s called a fiduciary duty - meaning they must act prudently, responsibly, and always in the best interests of the beneficiaries.
Let’s explore what a trustee does, what their duties include, and how they’re held accountable throughout the trust administration process.
A trustee is the person or institution appointed to carry out the terms of a trust. Their role is to manage and distribute the trust’s assets for the benefit of the beneficiaries, following the instructions laid out by the trust’s creator (known as the grantor or settlor).
Because trustees hold a fiduciary duty, they must act with honesty, diligence, and care. They are legally and ethically required to:
The trust serves as the trustee’s instruction booklet. They don’t get to decide who gets what or make up their own rules, trustees must follow the trust exactly as it’s written.
A trustee’s responsibilities are broad and carry serious legal weight. Their actions directly affect how efficiently a trust is managed and how well the beneficiaries are protected.
The trustee gathers and secures all assets that belong to the trust. This may include bank accounts, real estate, investments, and personal property. The trustee must take inventory of everything owned by the trust and ensure that these assets are managed safely and prudently.
As part of their fiduciary duty, trustees must adhere to the Prudent Investor Rule which requires them to make careful investment choices that prioritize the beneficiaries’ best interests. This responsibility ensures that trustees manage assets responsibly.
Trustees are responsible for paying any outstanding bills or debts associated with the trust. They are also responsible for making distributions according to the trust's terms, which may include specific instructions on timing and amounts.
Transparency is key to trust administration. Trustees are required to provide:
The trust accounting is the financial picture of the trust: what we started with, what expenses were paid, and how we arrived at each beneficiary’s portion.
A trustee must communicate regularly and act reasonably under the circumstances. That means answering questions, sharing updates, and making decisions in a timely manner. Trustees who delay or fail to communicate can create frustration and distrust among beneficiaries.
By fulfilling these trustee duties, they protect the interests of beneficiaries, who rely on the trustee’s decisions to be fair and in alignment with the trust’s terms.
When a trust becomes active - especially after the grantor’s passing - the trustee steps into a structured administration process. This includes:
Trust administration can be complex, so it’s common for trustees to work with an estate planning or trust administration attorney for guidance. Our firm regularly advises trustees on how to meet their obligations and avoid legal pitfalls.
One of the most common misconceptions about trustees is that their actions are automatically monitored by an attorney or a court. In reality, trustees operate largely on the honor system. This is why integrity is so important.
While the trustee has legal authority over the trust’s assets, there isn’t an outside lawyer overseeing every decision. The checks and balances come from the beneficiaries who have the right to see the accounting and take action if something seems wrong.
Because a trustee has access to significant financial resources, it’s crucial to choose someone trustworthy and detail-oriented. While cases of misconduct are rare, when they occur, it can be difficult to recover assets. That’s why selecting the right trustee - and having a clear trust structure - essential to safeguarding your legacy.
To promote transparency and prevent misunderstandings, we recommend the following steps:
After a trust is created, we often hold family meetings to review the trustee’s role and responsibilities with all parties involved. This open discussion also allows beneficiaries to ask questions and understand the plan in advance, reducing surprises later on.
A well-organized trust, complete with up-to-date records, clear instructions, and contact information, makes it easier for trustees to carry out their responsibilities. Open communication between the trustee and beneficiaries also promotes trust and reduces the likelihood of conflicts.
If you’re unsure whether a family member is the right fit, a corporate trustee (such as a bank or trust company) may provide neutrality and professional oversight. Corporate trustees follow strict procedures, which can add structure and peace of mind.
Serving as a trustee is an important and often demanding job. Trustees must manage assets carefully, communicate clearly, and act in the best interests of the beneficiaries at all times.
At KF Law Group, we help both trustees and families understand these responsibilities. Whether you’re creating a trust or serving as a trustee, we can provide the legal guidance and practical support you need to navigate each step with confidence.
Contact us today to schedule a consultation and ensure your trust is properly administered and your loved ones are protected.