As the Trustee of a trust, you have numerous responsibilities, some of which for various reasons may not receive your fullest attention. For example, if you are a Trustee, it is not uncommon to be confused about or even ignorant of your position’s requirements. You may not have read the Trust document recently, and instead are relying on your memory of its contents or on advice provided by a lawyer years ago. In that case, you may actually be operating under false assumptions about the requirements. With no one looking over your shoulder, it’s easy to grow complacent over the years.
Have you ever failed to open your trust investment statements? Neglected to conduct quarterly or even annual reviews of the trust’s assets? Do you feel that you’ve ‘lost track’ and are operating on autopilot? Welcome to the very common world of the Trustee. There is so much paper, so much mail, and so little time to handle it all.
Still, the beneficiaries are relying on you to manage the trust’s assets wisely. Of course, there are many different types of trusts with varying purposes but, in general, the following approach may help you gain greater control of the situation.
What Are Your Goals?
Begin by asking yourself what you are trying to achieve. Trust documents generally give broad powers to Trustees, but the Trustee needs to formulate goals and investment objectives for the trust and the beneficiaries. Are you growing wealth for future needs, or providing current income? Do you have specific needs to meet, such as the education of grandchildren or life-care for a special-needs child?
The Value of a Team Approach
Depending on your needs, it may be best to have a team of advisors — your accountant, attorney and Financial Advisor, who consider the trust’s goals and work in concert to help you achieve them.
For example, if you have the authority but not the obligation to pay current income out to the beneficiaries, you could pay out all of the income or you could leave part or all of it to grow within the trust. Each of these choices could affect taxes owed, impact an estate plan or influence the trust’s investment strategy.
It is a wonderful privilege to be the trustee of trusts that may affect the lives of others. To help you “get back in the driver’s seat” and meet your legal responsibilities, read the original document, open the statements, conduct a review of the trust’s assets, and consider consulting with a Financial Advisor for investment guidance. By scheduling time for regular reviews, you discipline yourself to analyze your progress and stay on track to achieving the trust’s goals.
* Articles are published for general information purposes and are not an offer or a solicitation to sell or buy any securities or commodities. Any particular investment should be analyzed based on its terms and risks as they relate to your specific circumstances and objectives. Morgan Stanley does not render advice on tax or tax-accounting matters. This material was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. Federal tax laws. Clients should always check with their tax and legal advisor before engaging in any transaction involving IRAs or other tax-advantaged investments.
If you’d like to learn more about managing a personal trust, please call Brian P. Jacobs at 661-290-2022.