Being chosen to serve as a trustee is an important responsibility, and it’s essential to understand exactly what that role entails. Imagine you’ve been named as a trustee in Wisconsin. In that case, you are tasked with managing the trust, ensuring everything runs smoothly, and ensuring the beneficiaries’ best interests are kept in mind. It may seem overwhelming, but with a clear understanding of your responsibilities, you can confidently navigate the process. Here’s a look at the duties you’ll need to know as a trustee in Wisconsin.
1. Duty of Loyalty
Your primary obligation as a trustee is to act solely in the best interests of the trust beneficiaries. This means you must avoid conflicts of interest and never use trust assets for personal gain. Even decisions that seem beneficial to both you and the beneficiaries must be handled carefully to ensure you are not breaching this duty.
2. Duty of Prudence and Care
Managing a trust requires careful, thoughtful decision-making. As a trustee, you must manage trust assets with the same care a prudent person would exercise when handling their own finances. This includes:
- Making sound investment decisions that align with the trust’s purpose.
- Diversifying investments to minimize risk.
- Keeping thorough records of all transactions and decisions.
- Failing to manage the trust responsibly could make you personally liable for losses.
3. Duty to Follow the Terms of the Trust
A trust document outlines how the trust should be managed and how assets should be distributed. As a trustee, you are legally bound to follow those instructions. Deviating from the trust’s terms—even with good intentions—can lead to disputes or legal consequences.
4. Duty to Keep Beneficiaries Informed
Open and transparent communication with beneficiaries is crucial. In Wisconsin, trustees are required to:
- Provide beneficiaries with regular updates about the trust’s assets and activities.
- Respond to reasonable requests for information.
- Notify beneficiaries of important events, such as asset distributions or changes in trust administration.
- Keeping beneficiaries informed helps build trust and reduces the likelihood of misunderstandings or disputes.
5. Duty to Account
You must maintain accurate records of all trust-related transactions, including income, expenses, and distributions. Beneficiaries have the right to review these records, and you should be prepared to provide clear, organized accounting reports upon request or at specified intervals.
6. Duty of Impartiality
If a trust has multiple beneficiaries, you must treat them fairly and without favoritism. This doesn’t always mean distributing assets equally; instead, it means making decisions that align with the trust’s terms while respecting the rights and interests of all beneficiaries.
Common Trustee Responsibilities
In addition to the general duties above, trustees in Wisconsin often handle:
- Collecting and safeguarding trust assets to ensure they are secure and properly titled.
- Paying debts, taxes, and expenses related to the trust.
- Distributing assets according to the trust’s instructions.
- Filing necessary tax returns and ensuring compliance with tax laws.
Potential Challenges Trustees Face
Trustees often face challenges like managing family tensions, addressing beneficiary disagreements, or handling complex assets (such as businesses or real estate). Navigating these issues requires not only an understanding of legal obligations but also patience, diplomacy, and attention to detail.
Why Working with a Professional Matters
Being a trustee is a significant responsibility that comes with potential legal risks if duties aren’t fulfilled properly. Mistakes—whether from miscommunication, poor record-keeping, or unintentional oversights—can lead to liability or disputes with beneficiaries.
If you’re unsure how to handle a particular responsibility or need guidance on managing the trust effectively, professional assistance can make a big difference.
Borakove Osman LLC Can Help
Serving as a trustee doesn’t have to be overwhelming. At Borakove Osman LLC, we’re here to help you understand your duties, navigate the complexities of trust management, and ensure you fulfill your obligations with confidence. Our experienced team assists trustees throughout Wisconsin, providing clear guidance tailored to your situation. Contact us today to learn how we can support you in your role and help protect both you and the trust’s beneficiaries.