A trustee is a person or entity responsible for managing and administering your trust according to your instructions and in accordance with state law. They are considered a fiduciary, and as a fiduciary, a trustee must protect the trust’s investments and act in the best interests of the beneficiaries. They must prepare and maintain trust accounting records and prepare tax-related forms, providing this information to the beneficiaries at their request.
A Trustee’s Authority to Sell Assets
When administering a trust, the trustee might encounter situations in which they need to convert trust assets into cash to provide liquidity to the trust. This could mean converting trust assets such as stocks and bonds or selling other trust property such as real estate or other high-value assets to generate the necessary funds. Though this decision must be based on prudent investor rules or standards and be in the best interest of the beneficiaries, trustees generally do not need beneficiary approval to liquidate or sell trust property. The biggest restriction is that trustees are not allowed to sell trust property for their own benefit with the exception being, if the trustee is also a trust beneficiary.
Creating Liquidity
A trustee may need to create liquidity for various reasons:
- Meeting financial obligations.
- Covering administrative costs.
- Fulfilling distributions.
- Responding to opportunities or challenges.
Investment Strategy
A trustee may need to modify the investment strategy for a variety of reasons:
- Evaluating economic conditions.
- Risk management.
- Adapting to beneficiary needs.
- Long-term growth versus income generation.
You Can Control the Sale of the Trust’s Assets
When establishing a trust, you may have specific assets you would like to preserve, whether for sentimental reasons, future generations, or other purposes. However, you should be cautious when including provisions that restrict the liquidation or sale of particular assets.
It is essential to strike a balance between preserving important assets like certain property or accounts and allowing the trustee the flexibility needed to effectively manage the trust.
A Trustee’s Responsibility Regarding Distributions to Beneficiaries
Overall, the trustee must adhere to the instructions laid out in the trust agreement. If the trust’s terms specify distribution of money or property to a beneficiary at a particular future date or upon meeting specific conditions, such as timelines and other triggering events like a beneficiary’s age or completion of a milestone, the trustee is obligated to follow these instructions precisely.
Ultimately, the trustee is responsible for ensuring the trust’s long-term viability and the best interests of the beneficiaries. An experienced Estate Planning Attorney can help you draft or update a trust and assign a trustee that fits your specific situation and wishes.
For tips and advice, look for The Property Sisters monthly segment in Stroll Palos Park. They are always here to answer your questions:
Bridget Gricus (708) 814-6253, bridgetgricus@gmail.com
Eileen Kerlin Walsh (708) 448-5169, Eileen@KerlinWalshLaw.com
