What is the responsibility of a trustee?
When creating a trust managing family affairs, many of us designate a family member to serve as the trustee. A surviving spouse. The eldest child. In many cases, a family member does this job without compensation.
If you have agreed to serve as a trustee, you may not really know what you just agreed to do. You might even assume there is no legal risk in agreeing to serve as a trustee.
It’s not easy to find articles describing the job of a trustee that is not filled with legalese. This articled titled “A Novice Trustee Primer” does a great job of describing the responsibilities of a trustee and is is recommended reading if you have a trust, are thinking about setting up a trustee, or if you have agreed to serve as a trustee.
If you don’t understand the differences between a will and a trust, it may cost your surviving spouse a great deal of money.
A Last Will & Testament
If your estate is subject to estate taxes and you leave your property directly to your surviving spouse, he or she loses the multimillion dollar federal tax exemption.
If you have a trust, the trust instructions can set up new trusts when you die, sometimes referred to as A/B Trusts.
The use of the A/B trust enables both you and your surviving spouse to claim their federal estate tax exemption allowance, potentially saving the estate hundreds of thousands of dollars. See the estate tax section for more information.
An authentic document is one that you state considers to be a legal representation of your wishes.
A Last Will and Testament
- If you have a will, most states require your estate representative to file the original copy with the probate court.
- If the original copy cannot be found, some states will consider you to have died intestate.
A Living Trust
- If you have a living trust, copies of your living trust are considered authentic, binding documents.
If you have a special needs child, it’s important for you to understand the difference in outcome between leaving them assets in a will or a trust.
A Last Will and Testament
- If you give assets to a special needs child via a will, the assets are now considered property owned by the child.
- The value of the assets may eliminate the opportunity for a child with special needs to obtain assistance from available local, state or federal assistance programs.
A Living Trust or a Testamentary Trust
- If your trust has instructions to manage assets on behalf of a special needs child, these assets are not considered to be owned by the special needs child.
- The value of these assets is not considered when applying for local, state or federal assistance