Responsibilities of trustees

A person in North Carolina who is the fiduciary for a trust has an obligation to manage that trust responsibly. If the person lacks financial experience, a professional can be contacted to assist in managing the assets.

There is a difference in principal and income in a trust. The two may be distributed to the same person or to different people; there is no standard way of handling this. However, a trust that is created for a surviving spouse often pays income to the spouse but not principal. The principal may be available to the spouse in case of an emergency. If the principal has not been used by the time the spouse dies, it might go to charity, to the children or to other beneficiaries.

Investments must be made with good results and in keeping with state prudent investor rules. These rules might be modified by the terms of the trust. Maintaining investments may not be sufficient, and the fiduciary may be liable if an heir says effective investments were not made. There should be an investment policy statement that addresses the investment goals. A financial professional may be able to provide advice about minimizing capital gains and income tax, what to sell and how to invest.

Whether a person has been appointed executor of a will or trustee of a trust, that person may want to consult an attorney for assistance in trust and probate administration. In addition to the financial responsibilities, trustees and executors may also be responsible for managing some family dynamics. For example, a beneficiary may only receive distributions at certain milestones chosen by the creator of the trust or at the discretion of the trustee. An executor might have to deal with family members who are unhappy about an estate plan or even challenge aspects of it.