Being named as a trustee is both an honor and a serious responsibility. Most people accept the role without really understanding what they’re getting into. The position requires time, attention to detail, and a willingness to follow legal standards that aren’t always intuitive. If you’ve been named as a trustee, here’s what the law expects from you.
Understanding Your Fiduciary Duty
You owe a fiduciary duty to the beneficiaries. It’s the highest standard of care under the law. What does that mean in practice? You must act in the beneficiaries’ best interests, not your own. Every decision you make should pass that test.
This duty applies whether you’re managing a living trust for a family member or administering a more complex estate. You can’t use trust assets for personal benefit. Period. You can’t favor one beneficiary over another unless the trust document specifically allows it. Conflicts of interest need to be disclosed, and in some cases, you’ll need court approval before moving forward.
Key Responsibilities Of A Trustee
First, you need to take control of all trust assets and keep them safe. This means identifying everything: bank accounts, real estate, investment accounts, and personal property. You’re responsible for obtaining proper insurance and maintaining any real estate. Make sure assets are properly titled in the trust’s name.
Keep detailed records of every transaction. We’re talking about all income received, expenses paid, and distributions made to beneficiaries. Many trustees open a separate bank account for the trust. It makes life easier. Beneficiaries have the right to request an accounting, and you must be able to provide one that holds up to scrutiny.
The Illinois Prudent Investor Act requires you to invest trust assets responsibly. Diversify to reduce risk. Consider the purposes of the trust when making investment decisions. Don’t have investment experience? You can hire a professional advisor. Just remember, you’re still responsible for monitoring their performance.
You must keep beneficiaries reasonably informed. This typically means providing copies of the trust document, regular accountings, and updates about significant decisions. Silence breeds suspicion. It often leads to legal disputes that could’ve been avoided with simple communication.
Follow the terms of the trust when making distributions. Some trusts require regular payments. Others give you discretion. If the trust uses standards like “health, education, maintenance, and support,” you need to understand what those terms actually mean and document why you approved or denied specific requests.
Common Mistakes To Avoid
As a first-time trustee, you’ll more than likely make at least one error, but there are ways to prevent this. First and foremost, maintaining tight control over the location of funds is paramount. Never mix personal and trust funds. Failing to file tax returns for the trust results in penalties that beneficiaries won’t appreciate. Delaying distributions without a good reason frustrates everyone and may violate the trust terms.
Another mistake we see frequently is failing to act impartially. If multiple beneficiaries exist, you can’t favor one without authority to do so. You also can’t delegate your duties entirely to someone else, though hiring professionals to assist you is perfectly acceptable.
When To Seek Legal Guidance
Some trustee decisions require legal advice. There’s no shame in that. If beneficiaries disagree about distributions, if the trust document seems unclear, or if you’re unsure whether an action is permitted, getting help protects both you and the beneficiaries.
At Kravets Law Group, we work with trustees who need practical guidance on their duties and responsibilities. We help trustees understand trust terms, complete required tax filings, respond to beneficiary requests, and handle disputes when they arise. Serving as a trustee doesn’t have to feel overwhelming when you have experienced support. A Chicago trust lawyer can review your specific situation and provide the guidance you need to fulfill your duties properly. Whether you’re just starting out as a trustee or you’re facing a challenging decision, working with a Chicago trust lawyer gives you confidence that you’re doing things right.