Trusts and Trustee’s Duties

A trust is created when the person creating the trust (grantor/settlor) assigns control of property to another person (trustee) to manage for the benefit of other people or entities (beneficiaries). A trustee is a person chosen to be legally responsible for managing, investing and distributing trust assets in accordance with the wishes of the person who created the trust (settlor). Many people who have been assigned the duties of a trustee seek professional trustee assistance to help understand trusts and manage trust assets.

Types of Assets Normally Placed In Trusts

The owner of property and assets can initiate a trust for the purpose of holding property and assets for the benefit of someone else. Assets that can be placed in a trust include: real property, investments, life insurance, savings accounts, vehicles, and even special collections like fine art and sports memorabilia.

Duties Of The Trustee

Once the settlor has properly established a trust, the control and management of the trust lies in the hands of the assigned trustee. The trustee is in charge of the trust until all funds are exhausted or until the trustee is unwilling or unable to serve. Duties of the trustee include:

  • Collection and management of trust assets
  • Accounting and administration of the trust
  • Communication and reporting to trust beneficiaries
  • Managing the investment of trust assets
  • Distribution of trust assets to beneficiaries
  • Proper tax filings for the trust

Ohio law requires the trustee to keep trust property separate from personal property, keep adequate records, and file reports of trust administration.

Keep Trust Beneficiaries Reasonably Informed

The beneficiaries of a trust receive distributions in accordance with the trust document. The trustee must have concern for the beneficiaries and has a duty to keep them reasonably informed of the trust and its administration. The trustee must keep the beneficiaries informed of material facts necessary for the beneficiaries to protect their own interests. Under Ohio law, the trustee must promptly furnish the beneficiary a copy of the trust instrument upon request.

Although many trusts are designed to benefit a settlor’s heirs, oftentimes trusts are established to benefit clubs, groups, churches or charitable organizations. A trustee has the responsibility to look after trust property on behalf of entity beneficiaries as well. Therefore, it can be very important for a trustee to seek professional trustee assistance to help understand trusts and manage trust assets.

Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial planning. He also practices elder law planning, estate planning, and Medicaid planning in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Please contact him if you have any questions regarding a trust or the duties of a trustee.