Over the past thirty years, Trusts have become an important estate planning tool. Two most popular trusts are:
1. Living Trust (created while the individual is alive)
2. Testamentary Trust which is part of the will and goes in effect after death
Trusts have three basic components:
1. The first component is the individual or couple that funds the trust. They are known as the grantor or settler. The grantor places assets such as real property, investments, personal property, cash etc. into the trust.
2. The second part of the trust is the trustee, who manages the assets in the trust.
3.The final component of the trust, are the beneficiaries of the trust. The beneficiaries receive the benefit of the assets once the settler is deceased.
In cases where the grantor has a living trust and is still alive, they can be the trustee managing their own trust assets. They can also receive the benefits of their own trust assets. However, in situations in which the grantor loses capacity to manage their own trust effectively, a Successor Trustee can be appointed to manage the trust assets. It is the Successor Trustee’s responsibility to manage the trust in accordance with the terms and conditions set forth in the trust documents.
The fundamental duties of the Successor Trustee are:
1. The trustee has a legal and moral duty to act in a responsible manner.
2. Become familiar with the terms of the trust.
3. Act impartially and in the interest of all the beneficiaries.
4. Remain loyal to the grantor, acting in the best interest of the grantor as well as the balancing the interest of the beneficiaries.
5. Inventory and marshal trust assets.
6. Be accountable for all financial transactions. This includes keeping accurate business records and books.
7. Carry out the terms and conditions of the trust.
8. Determine who the beneficiaries are and keep them properly informed.
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