Trustee Roles

Gain insight into the duty and responsibility of a trustee. From John Pakauski’s book, “Pankauski’s Trustee’s Guide.”

The Role of a Trustee: Duty & Responsibility

Are You Responsible, A Number Cruncher, Or A Control Freak?

Some people are designated, or nominated, as trustees in the trust document or may otherwise have a natural interest in serving as trustee. You may like finance, business, legal issues, may be number-crunchers or have a back ground in finance or law or accounting. Others quite frankly are control freaks who want to manage the money and be in charge. Which one are you?

For those with an interest in serving as trustee or a desire to control the purse strings of others, you need to temper that desire to control with reality: you serve them.

Trustee Alternatives

If you are a beneficiary who is nominated to serve as trustee, and you want to have a say in how the trust assets are invested, you may be able to do this even if you decline to serve as trustee.

Increasingly, professional trustees are asking beneficiaries about such things as investment time horizons, risk tolerance, income needs, marginal tax brackets and a host of other issues. This is intended to assist the trustee in investing trust assets properly over the long term, mindful of after-tax and after-fee returns.

As a beneficiary, you’re entitled to information and accountings which can often include monthly account statements. This means that you have the opportunity to view, in depth, on a regular basis, how the trust assets are being invested. While a trust officer at a professional trust company has neither the desire nor tolerance to hear from a trust beneficiary every single day, you should know that the lines of communication should be open, helpful, informative, and professional – both ways.

My point being: today’s trust law, as well as the operation of today’s trust departments of professional fiduciaries, provide a mechanism for you to be involved with the trust without you taking on the responsibilities, time commitment and potential liability of serving as a trustee. You should not accept appointment as a trustee based on the belief that you want to stay involved with the trust. You, the beneficiary, already are, and you are entitled to be.

Compensation Is Not A Good Reason To Serve

If you want to serve as trustee to make some money, think again. While it’s true that a trustee is entitled to reasonable compensation, along with that pay, there comes potential liability for serving as trustee. And you’re probably not going to make a six-figure income as a trustee unless the trust has assets in excess of $10 million.

Still Want To Serve?

So, if I haven’t talked you, the individual, out of serving as trustee, then I hope that you will consider hiring a professional bank or trust department to serve as co-trustee with you. If you don’t want to resign or decline to serve, then hire trust counsel.