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Fiduciary Series: Trustee

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The next steps after being named a trustee depend on what kind of trust to which you’ve been named the fiduciary. Specifically, you must first determine whether you’re trustee of a revocable or irrevocable trust. 

Revocable

As a quick reminder, a revocable trust is an amendable trust agreement of which the Grantor (the person who made the trust) may also serve as Trustee. However, regardless of who is acting as Trustee, the Grantor may amend a revocable trust at any time. 

If you’ve been named as Trustee, you need to know what the trust says. Most revocable trusts maintain the Grantor as Trustee and name non-grantor parties as successor Trustee. This person steps into the role as Trustee if one or both of the Grantors becomes incompetent, incapacitated, or otherwise unable to act because of illness or death. Just because you’ve been named as a successor Trustee doesn’t mean you can avoid doing your homework. You should have a copy of the trust, be appraised of the material terms of the trust, and know what assets the trust holds. 

Irrevocable

An irrevocable trust is one that is not amendable and cannot have a Grantor as the Trustee. Thus, if you’re named as the trustee of an irrevocable trust, your job starts on day one. Whatever is held by the trust is managed by you and only you—unless you have a co-trustee. Similar to a revocable trust, you should understand the terms of the trust and you should be aware of the trust assets. 

Irrevocable trusts are typically used to protect assets for a particular reason. Therefore, they may have stringent terms and must be administered with the utmost care. In consideration of the gravity of this duty, you should seek the advise of counsel to understand the left and right parameters of your authority with respect to the trust. Furthermore, you should likely seek the advice of an attorney before making major decisions on behalf of the trust. After all, the trust was set up with an abundance of care and forethought. Such care and forethought should be the theme going forward. 

If you become the Trustee of a trust created under a will (a testamentary trust) or under another trust, that trust will be considered irrevocable. 

Conclusion

Because trusts are such flexible documents, the terms and manner of administration may differ greatly from one trust to another. Thus, it’s imperative that the individual tasked with the proper administration of the trust must seek the proper guidance to ensure they carry out they duty properly.

If you have questions about the administration of trusts give the experienced attorneys at McIntyre Elder Law a call at 704-259-7040 or visit our website at mcelderlaw.com.


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