The responsibilities of a trustee are:
- Read a copy of the trust agreement, keep it with the trust records and review it annually.
- Deposit checks or bank drafts funding the trust. Attach a photocopy of same to Schedule “A” of the trust agreement.
- Obtain a federal employer identification number for the trust.
- Consult with your financial advisor as to the types of accounts (brokerage firm, management account, bank account) to open and deposit funds. Under the Prudent Investor Rule, trustees must formulate an overall investment strategy that takes into account general economic conditions, inflation, the beneficiary’s needs, the duration of the trust and the tax impact. They usually must diversify their investments and can delegate their duties to outside experts.
- Annual fiduciary tax returns (IRS form 1041) and equivalent state forms will be due on or about April 15th of the year following the opening of the trust and each subsequent year thereafter. Consult with your attorney or accountant for further information.
- Consider change of trustees when there is a change of circumstances.
- Review requirements for closing the trust with an attorney. (i.e. releases and final tax returns.)