What Are My Responsibilities as a Trustee?


When someone appoints a trustee, this is indicative that they place a tremendous amount of confidence in their ability and integrity. However, trustees are sometimes unsuitable for this position or don’t fully understand their responsibilities. When an individual fails to fulfill their obligations as a trustee, this is considered a breach of fiduciary duty. A breach of fiduciary duty can result in severe consequences. Therefore, understanding the responsibility of this position is crucial. Please continue reading to learn the importance of preserving a trust and how a proficient Montgomery County Trust Attorney can help you understand your duties as a trustee.  

What Are the Responsibilities of a Trustee?

First and foremost, a trustee must act reasonably and competently in all matters relating to the trust. Essentially, they must prudently manage trust assets in alignment with investment objectives. If the trustee invests the assets in the trust in a prudent manner, but there is a stock market crash, the trustee would not be liable for the losses. However, if the trustee made an unauthorized investment, breaching their duty, they would be liable for the losses.

Moreover, the trustee is responsible for carrying out the terms of the trust laid out by the grantor. It’s important to note that the beneficiary’s wishes are subordinate to the grantor’s intent. The trustee is responsible for carrying out the grantors’s intentions in creating and funding the trust. As a trustee, the money or assets in the trust can only be used for the beneficiary’s benefit. Everything you do in this role must be done in the beneficiary’s best interests. You will have to communicate with the beneficiaries and provide pertinent information regularly. Additionally, you will be responsible for monitoring trust expenses to ensure they are appropriate and reasonable.

Furthermore, accounting for and reporting on trust assets and preparing the necessary tax and regulatory filings are required. This means you must keep complete and accurate records of all income collected, expenses, purchases, sales, and other transactions of the trust. You must maintain proper and adequate insurance on trust assets when appropriate, file fiduciary income tax returns for the trust where applicable, and manage third-party professionals.

What Happens If You Violate a Trust?

The probate court can impose severe consequences and penalties if a trust breach occurs. This includes the suspension or removal as accurate, incurring surcharges, and being ordered to pay fines for damage caused by the breach. In rare cases when this fiduciary duty is breached, trustees can face criminal charges. Trustees must be loyal to the trust and always act in good faith.

Whether selecting a trustee or considering accepting this role, you should be aware of the obligations and responsibilities this position imposes. At JD Katz, we have the experience and expertise to offer unparalleled responsibility to trustees. Contact our firm to learn how we can assist you today.