Managing a family trust may be a daunting task for a trustee, the person appointed to manage the trust, if the trustee lacks financial or legal experience. A family trust is a legal instrument that allows a family to manage substantial assets via management and guidance of a trustee. The family trust also will provide for distribution of the trust assets upon the death of the trustor, the creator of the trust. As the trustee of a family trust, you must make yourself aware of the major functions of a trustee.
Gather all of the assets of the family trust. Review the trust document to determine what assets are a part of the trust, such as a house, bank accounts or an investment account. You must write formal letters to the various institutions that hold these assets, such as a bank, indicating that you are the trustee of the family trust and request that the entity re-title the asset in the name of the trust. Attach a copy of the trust document to your letters.
Manage the assets of the family trust. Review the trust document to determine if it contains any provisions regarding the proper management and investment of trust assets. Sometimes a trust will not allow a trustee to invest in certain assets, such as real estate or stocks. The goal of the trustee is to grow the assets of the trust by investing and managing.
Pay any debts and taxes owed by the family trust. A family trust may incur taxes due to capital gains from investments or other taxes. The family trust might also incur debts if you borrow on behalf of the trust.
Distribute assets from the family trust to named beneficiaries. Review the trust to determine to who and when you must pay out assets. For example, the trust may state that Jane Smythe is to receive 3 percent of the net trust income per year.
This article does not constitute legal advice. See an attorney for your specific situation.
- "Introduction to Estate Planning in a Nutshell"; Robert J. Lynn, et al.; 2004
- "Wills, Trusts and Estates Examples & Explanations"; Gerry W. Beyer; 2007
- Internal Revenue Service. "Instructions for Form 5227: Split-Interest Trust Information Return," Pages 1-2. Accessed July 24, 2020.
- This article does not constitute legal advice. See an attorney for your specific situation.
Andrew Mayfair has written professionally since 2009 when his article on patent law was published in the "Loyola of Los Angeles Entertainment Law Review." Mayfair earned his Bachelor of Science in biochemistry from the University of California, Davis and his Juris Doctor from the University of the Pacific, McGeorge School of Law.