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Should I agree to become a trustee?

The responsibility of trust administration in Michigan involves quite a few financial duties, and if someone has asked you to be a trustee, you should consider it carefully before agreeing. The American Bar Association explains that your role depends heavily on instructions in the trust, so you should discuss the specifics of issues such as investments and distributions with the trustor to learn what the appointment will entail.

Having a lack of experience in investing does not necessarily mean you should turn down the job if you are otherwise willing to accept it. Many fiduciaries rely on professional advice to guide them in how to handle the assets based on the terms and goals of the trust, as well as the following:

  • What the state's prudent investor rules are
  • Which assets to invest
  • How to invest them
  • What steps to take to minimize taxes

Taxes are another responsibility that you must deal with as trustee. Once beneficiaries have begun receiving payments, you will need to provide each of them with a yearly income tax statement if they are taxable. Because the trust will also be earning annual income, you will have to file that income tax return.

The trustor will probably have an end date in mind for the trust. For example, many people plan to have their children receive an income from the trust until they reach the age of 18, 21 or 25. At that point, you would then provide the principal to the beneficiary, and your responsibilities would come to an end. 

Although this general overview may help you to understand some basics about trustee duties, it should not be considered legal advice.

 

 

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