Trustees in Illinois have certain duties and responsibilities specified by law. As a trustee, trust creator, or beneficiary, understanding a trustee’s job will help you better understand how trusts work.
What Is a Trustee?
A trustee manages and controls all assets placed in trust by a trust creator for the benefit of specified beneficiaries. When a trust creator places assets in trust, he or she cedes all legal control over them to the trustee. While the trustee has legal ownership of the assets, the beneficiaries have beneficial ownership. The trustee must act in the beneficiaries’ best interest when managing the assets.
What Are a Trustee’s Responsibilities?
In Illinois, trustees have specific duties and responsibilities related to managing trust assets. A trustee has both a duty of loyalty and a duty of care. The duty of loyalty requires that the trustee avoid conflicts of interest and act in all beneficiaries’ best interest. A trustee should not favor one beneficiary over another or take steps that benefit the trustee personally.
A trustee must prudently invest assets with the goal of increasing or maintaining their value. To fulfill this duty, the trustee needs to exercise skill, care, and caution. Depending on the type of asset, this may requiring opening brokerage accounts, seeking investment advice, getting appraisals or restorations done, hiring a property manager, and more. Investments should be diversified, with a balanced portfolio in consideration of the trust assets as a whole.
Further, the trustee must make distributions to beneficiaries in a timely fashion and do regular accountings for the trust. Beneficiaries may be able to request distributions, in which case the trustee must use discretion in deciding whether to distribute funds.
How Can a Trustee Best Handle These Duties?
To carry out his or her duties, the trustee may need to hire professionals such as accountants, lawyers, and investment brokers. Many trustees do not have expertise in areas such as real estate management, investing, or accounting. Professionals can help trustees appropriately manage trust assets and fulfill their other responsibilities.
If you are a trustee needing assistance with managing a trust, seek out legal advice. A lawyer can help you better understand and fulfill your responsibilities.
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