A trustee is the person you name in your trust that will follow your trust powers and distribution plan when it comes into effect, which could be when you become incompetent, or when you pass away. A trustee should be chosen based upon his or her ability to invest assets, supervise others to invest assets, handle expenses, and distribute the assets as set out in the trust agreement. The role of being trustee is often time-consuming.
When naming a trustee, you will want to select some alternate people to serve. Your initial and alternate trustees can be anyone. You can name an individual trustee, or a corporate trustee such as a bank. An out-of-state trustee does not need to be bonded (i.e. pay for an insurance policy to serve in the trustee/executor position), unlike an out-of-state executor.
A trustee is generally entitled to compensation for serving. Normally, reasonable compensation is determined by looking at what other local individuals or corporate trustees are charging to handle similar asset values.
On January 1, 2007, Ohio increased the reporting requirements for a trustee. Your trustee is now required to give reports to your beneficiaries upon your death. You can place some limits on who gets an annual report by placing limitations in your trust document.
In addition to keeping beneficiaries informed, the following are a few of the duties your trustee will be responsible for:
- gathering the trust property,
- obtaining a trust taxpayer identification number with the Internal Revenue Service (if necessary),
- locating the beneficiaries,
- following the instructions you gave within the trust agreement,
- investing the trust property and reviewing the investments periodically, and
- making distributions to trust beneficiaries.
In completing the above duties, the trustee must exercise good faith in all matters. This means that the trustee cannot act in their own best interest, when this action is not also in the beneficiaries' best interest.
If you would like to discuss the initial selection of a trustee and successor trustees, changing your initial trustee selection, or if you are a trustee and would like assistance in administering a trust, please call Kim Cutler at Bridges, Jillisky, Weller & Gullifer, LLC.