Taxes. Depending on whether the trust is revocable or irrevocable and whether it is considered a “grantor” trust for tax purposes, the trustee will have to file an annual tax return and may have to pay taxes. In many cases, the trust will act as a pass through with the income being taxed to the beneficiary. In any event, if you keep good records and turn this over to an accountant to prepare, this should not be a big problem.
Delegation. While you cannot delegate your responsibility as trustee, you can delegate all of the functions described above. You can hire financial advisors to make investments, accountants to handle taxes and bookkeeping for the trust, and lawyers to advise you on questions of interpretation. With such professional assistance, the job of trustee need not be difficult. However, you still need to communicate with those you hire and make any discretionary decisions, such as when to make distributions of principal from the trust to one or more beneficiaries.
Fees. Trustees are entitled to reasonable fees for their services. Family members often do not accept fees, though that can depend on the work involved in a particular case, the relationship of the family member, and whether the family member trustee has been chosen due to his or her professional expertise. Determining what is reasonable can be difficult. Banks, trust companies, and law firms typically charge a percentage of the funds under management. Others may charge for their time. In general, what’s reasonable depends on the work involved, the amount of funds in the trust, other expenses paid out by the trust, the professional experience of the trustee, and the overall expenses for administering the trust. For instance, if the trustee has hired an outside firm for investment purposes, that expense would argue for the trustee taking a somewhat smaller fee. In any case, it makes sense to consult with a professional experienced with trust work who can guide you on what would be normal fees considering all of the circumstances.
In short, acting as trustee gives you a wonderful opportunity to provide a great service to the trust’s beneficiaries. The work can be very gratifying. Be sure to keep an eye on the responsibilities described above to make sure everything is in order so no one has grounds to question your actions at a later date. And when in doubt, you should contact an attorney for advise.
Practice Areas: Aged and Aging; Elder law; Estate Planning; Medicaid; Medicare; Long Term Care Insurance; Wills; trusts; Health Care; Guardianships; Probate; Taxzation; Trusts & Estates; Veteran's Benefits/Planning; Planning for Same Sex Couples.
Admitted: 1977, New York and Massachusetts
Member: New York State Bar Association (Member, Executive Committee, Elder Law Section); National Academy of Elder Law Attorneys (Board of Directors; Co-Chair, Public Policy Committee; Chair, Health Care Decision making Subcommittee of the Public Policy Committee; Member, Public Relations Committee and Long Term Care Task Force); Member, & Present Chair Legal Committee of The Alzheimer's Association (Long Island Chapter).
Biography: Phi Beta Kappa. Certified Elder Law Attorney by the National Elder Law Foundation. Lecturer, New York State Bar Association, The National Academy of Elder Law Attorneys, The Alzheimer's Association and many other organizations. REciepient of; rose Kryzak Senior Leadership Award for providing outstanding legal services to seniors; AARP's Building Bridges Award.
Contributing articles found in: The New York Times, Long Island Newsday, The New York Law Journal, The Wall Street Journal, Queens Courier.