UNDERSTANDING THE ROLE OF A TRUSTEE

& WHY YOU NEED ONE

When you think about estate planning and managing your finances, you’ll often hear about the role of a “trustee.” It’s a term that pops up frequently, yet many people aren’t quite sure what it entails or why it’s so important for estate and special needs planning. So, let’s take a closer look at what trustees do and why having one is essential for navigating the complexities of trust administration. 

What is a Trustee?

A trustee, also known as trust administrator, is an individual or entity appointed to manage and administer a trust on behalf of its beneficiaries according to the terms outlined in the trust document. A trustee’s primary duty is to enhance the quality of life of the designated beneficiaries. This is accomplished by executing the wishes of the trust’s creator (grantor), managing the assets held within the trust, and upholding legal and fiduciary responsibilities.  

Key responsibilities of a Trustee include: 

Asset Management: One of the primary functions of a trustee is to manage the assets held within the trust. This may involve investing assets, managing a home, collecting income, and making distributions according to the terms of the trust. 

Protect Government Benefit Eligibility: For a special needs trust, a trustee’s primary responsibility is to manage the trust in a way that maximizes the beneficiary’s financial security while safeguarding their eligibility for government benefits. This requires careful planning, adherence to regulations, and ongoing monitoring of the beneficiary’s circumstances and the broader legal and policy landscape. 

Record Keeping and Reporting: Trustees are responsible for maintaining accurate records of all trust transactions and providing regular reports to beneficiaries as required by law or specified in the trust document. 

Tax Compliance: Trustees must ensure the trust complies with all relevant tax laws and regulations. This includes filing tax returns for the trust and ensuring that taxes are paid promptly. 

Fiduciary Duty: Trustees have a fiduciary duty to act in the best interests of the beneficiaries. This requires them to exercise care, loyalty, and prudence in managing the trust assets. 

Why You Need a Trustee 

Expertise and Experience: Trust administration involves navigating complex legal and financial landscapes. A professional trustee brings expertise and experience to ensure that the trust is managed effectively and in accordance with the law. 

Objectivity: Trustees provide an impartial perspective, which can be invaluable in situations where conflicts arise among beneficiaries or when difficult decisions need to be made. 

Risk Management: Trustees help mitigate risk by ensuring the trust assets are properly diversified and managed properly. 

Efficient Administration: Managing a trust can be time-consuming and labor-intensive. By delegating trust administration to a professional, like The Good Shepherd Fund, you can be assured that the trust will be administered efficiently and effectively. 

Spending Plan: Trustees help create a spending plan to ensure the longevity of funds, while maximizing the quality of life of beneficiaries.  

Government Benefits Compliance: Trustees of special needs trust should be well-informed about current government benefits and the legal guidelines which a trust must adhere to, ensuring benefit eligibility remains intact.   

Legal Compliance: Trustees should be well-versed in the legal requirements governing trusts and can ensure that the trust remains in compliance with applicable laws and regulations. 

Trustees play a vital role in managing and administering trusts, providing expertise, objectivity, and efficiency. Whether you’re creating a trust as part of your estate plan or a current trustee of an existing trust, having a non-profit trustee can offer peace of mind and ensure it is managed in accordance with the trust document and the law. 

At The Good Shepherd Fund, we pride ourselves on enhancing the quality of life of our beneficiaries. As a national non-profit trustee with over 50 years of experience, we invite you to learn more about us and how we can serve you and your family for generations to come. To learn more, call us at (408) 573-9606 or visit us online at GoodShepherdFund.org.  

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