FINANCING AT A GLANCE: Duties of a Trustee – What You Need to Know [Column] | Business


A trust is a legal contract created when you transfer property to a trustee for the benefit of someone else. The trustee manages the property for the beneficiary in accordance with the terms and instructions of the trust document. In other words, the trustee has legal ownership of the asset, while the beneficiary has beneficial ownership.

The responsibilities and duties of a trustee are broad because the trustee is a trustee who must act in the best interests of the beneficiary and who owes the beneficiary the highest duty of loyalty. If you are appointing someone to act as a trustee, there are a few questions worth asking:

• Is the future fiduciary capable of assuming the responsibilities?

• Does the future trustee have the necessary time to perform their duties?

• Is the future trustee qualified and willing to fulfill this role?

• If the answer to any of these questions is uncertain, would the trust benefit from the services of an incorporated trustee?

To give you a better idea of ​​what is expected of a Trustee when deciding who to appoint to this role, we have put together a list of the many functions of a Trustee.

Obligations towards beneficiaries

First and foremost, a trustee should communicate regularly with designated beneficiaries, including providing detailed account statements in a timely manner. In addition, a trustee must make disbursements to beneficiaries in accordance with the specific conditions of the trust document.

Accounting and administration

In addition to providing account statements to interested parties, a trustee should establish appropriate accounting procedures for trusts in order to:

• Prepare an inventory of assets

• Update asset title

• Collect, confirm and pay invoices

• Track income and capital

Investment management

When it comes to managing a trust’s investments, a trustee should investigate and use appropriate asset strategies based on the language and requirements of the trust. To accomplish this task, a trustee might consider working with an investment manager. They can help the trustee to regularly review assets for performance and quality, initiate transactions to minimize tax consequences, and confirm the daily cash investment. They can also carry out regular and strategic rebalancing and adjustments to the portfolio if necessary. If a trustee uses an investment manager, the trustee must nevertheless monitor the performance of the investment manager and regularly review the portfolio.

Custody of titles

A trustee must promptly collect all assets and related income and dividends. Going forward, they should confirm that detailed records of all assets and transactions are kept, including confirming that dividend notices and bond calls and maturities are being followed. Where appropriate, they can work with an investment manager to act on stock warrants and subscription rights.

Legal obligations

A trustee assumes legal responsibility for the proper administration of the trust and its assets. This means investigating claims against the trust, contesting invalid claims and obtaining legal advice where appropriate.

Tax Responsibilities

Maintaining accurate documentation is crucial for a trustee, including taxable income records, asset acquisition dates, cost basis, and adjustments. This allows for the timely filing of annual trust tax returns and provides information to beneficiaries to file their tax returns as needed.

Asset Management

Many types of assets can be securitized in a trust. Each asset must be managed according to its requirements:

• Conventional financial assets – Traditional cash and investments.

• Personal Property – The trustee must preserve property and arrange to assess the value of all assets held in the trust until they are distributed or sold. This can include works of art, family collections and heirlooms, household furniture, jewelry, and other personal belongings.

• Business interests – The trustee may be required to provide management, valuation and advisory services for any business interest held in the trust.

• Other Unique Financial Assets – Copyrights and assets that are difficult to value may require specialized valuation and management by the trustee.

Real estate assets

Real estate can be complicated, which is why it is important for a trustee to know what is expected of them. Before being able to transfer ownership to beneficiaries or other new owners, a trustee must:

• Ensure that safety, insurance and maintenance are maintained

• Check the status of taxes, assessments and debts against the property

• Confirm that there is no environmental contamination; if this is the case, take the necessary measures to remedy

• Obtain reviews, titles, proceedings and summaries

A corporate trustee may be the best option

Managing trusts and estate plans can be complex, confusing and emotional. A corporate trustee helps simplify the management of your trusts and estate planning by clarifying legal implications, acting as trustees and trustees to provide advice that is in your best interest, taking on administrative duties and coordinating with your financial advisers, planners, lawyers and accountants.

This is my last column. I have had the privilege of sharing important financial information with you over the years. Thank you, readers, for your interest. I wish you the best financial health.

Peter K. Hoover, CFP®, financial advisor for 40 years, is Senior Vice President, Financial Advisor of Wealth Enhancement Group. He is the founder of Malvern-based Hoover Financial Advisors, which is now under the umbrella of the Wealth Enhancement Group. Since its inception in 2005, HFA has received numerous awards, including being ranked by Advisory HQ as one of Philadelphia’s top eight financial advisors in 2018. The previous year, HFA merged with Villanova Financial Services. In 2012, HFA was selected as Small Business of the Year by the Chester County Chamber of Commerce and Industry. Hoover knows how important prudent money management and up-to-date financial planning technology are in helping individuals improve their quality of life and that of their children. For more information, visit the company’s website at


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