The trust itself is a legal agreement that outlines how someone’s assets will be handled when they pass away. This person is called the grantor, and they are also the person who makes the trust. They are also the only person who can make changes to it. When the grantor dies, their assets are distributed among the listed beneficiaries of their trust.
Before the guarantor’s death, the assets are managed by a trustee. The guarantor assigns this person to manage the trust assets while they are alive, and it is not uncommon for a guarantor to name themselves as the trustee. In marriages, the spouses are often co-trustees, allowing them to handle their assets without trouble should something happen to one of the spouses. If the trustee cannot continue to manage the trust assets, then a named successor trustee takes over those responsibilities. There are usually multiple successors listed as fail-safes.
Responsibilities of a Trustee
If one is named a trustee or a successor trustee, it is important to understand their responsibilities toward the trust. As a trustee, one should pay close attention to the terms of the trust. The trust's assets should stay separate from the trustee’s personal assets and are not for the trustee to use for their benefit. While investing and distributing assets are part of the trustee’s job, these actions should be taken in line with the terms of the trust and as part of keeping assets safe for future beneficiaries. As part of these financial responsibilities, trustees must also file tax returns for these assets as necessary. Trustees control and manage the distribution of assets to beneficiaries and must do so without bias for one beneficiary over another per the trust's instructions. Failing to fulfill these responsibilities can result in the trustee being held liable for whatever damages they caused to the trust and its assets.
If you find yourself the trustee of a property and the grantor has passed, your first step should be to meet with an attorney before proceeding to do anything with the trust's assets. We at Kho and Young can help you with this process. Feel free to contact us for any further questions.