What is the Role of the Trustee in a Maryland Estate?

Trustees are individuals tasked with managing trusts to benefit other entities. They have a great deal of responsibility placed on them. Often, people think of trusts in the context of putting money aside while it increases in value for later use by the beneficiary. However, trusts can be made for many different reasons, including the streamlining of estate planning and probate.

In a Maryland Estate, the role of a trustee will depend on the particular terms of the trust in question, but generally, the trustee must work to carry out the grantor’s wishes and work in the best interests of the trust. Since trusts can be used for so many things, a trustee’s duties will generally change depending on the circumstances, although they generally involve managing assets and paying income to beneficiaries. When an estate is involved, the estate trustee has to work for the benefit of the estate and its potential beneficiaries.

For a totally free review of your trust-related issues, call Rice, Murtha & Psoras’s team of Maryland trusts and estate attorneys at (410) 694-7291.

What is a Trust in Maryland?

In order to fully understand a trustee’s role in Maryland estates, you need to understand how trusts work. A trust is a legal relationship in which one entity entrusts another with property, money, or something else of value and charges them with using it for a specific purpose. The “grantor” sets up a trust to be run by a “trustee” for the benefit of a “beneficiary.” Usually, the trustee will have a set of rules laid out that they have to follow about what they can and cannot do with assets in the trust.

A very common reason for trusts is to smooth out the estate planning process, ensuring that certain assets do not go through probate.

What Do Trustees Do for Maryland Estate Trusts?

As previously stated, a trustee’s duties will be spelled out in a trust’s governing documents. For many kinds of trusts, the type of governing document will vary. For an estate trust, the governing document is the deceased person’s will. In essence, the grantor is the deceased person, and the beneficiary is whoever or whatever entity is listed in the will. Just like with other kinds of trusts, there are a number of duties a trustee may have to carry out:

Manage Estate Assets

A very important job that trustees have is managing assets – in this case, the estate’s assets. Managing assets means more than just passively looking after them. Trustees can also do things that have a positive outcome for beneficiaries. For example, if there is money in an estate trust, the trustee can (and likely has a duty to) invest that money or put it in a bank so that it generates interest rather than just letting assets sit there doing nothing.

Fiduciary Duty

Trustees have what is known as a “fiduciary duty” to beneficiaries. A fiduciary duty is an obligation to act in a way that financially benefits someone else. Here, the trustee has a fiduciary duty to act in a way that benefits the estate for which they are the trustee. For example, a trustee can smartly invest funds in the estate they are managing. However, a risky investment of those funds may not be fulfilling their fiduciary duty, depending on the circumstances.

Trust-Specific Responsibilities

Some responsibilities of a trustee may be specific to the trust or estate they manage. Since a trust can be created for any legal purpose, the oddball responsibilities of a trustee can vary wildly. If you have concerns about some of these responsibilities, you should talk to our Baltimore estate and trusts attorneys.

One example of a trust-specific responsibility would be distributing assets as income. For example, if a trust is set up to care for a child, spouse, or other family member with special needs, the trustee needs to ensure that the beneficiary gets their allotted income for their needs each month.

What Do Trustees Do in Maryland Living Trusts?

Another kind of trust that is often involved in estate planning is a living trust. These trusts are revocable trusts that can be reversed or undone at any time, and they generally have the grantor also set up as a trustee and beneficiary. This allows them to control what happens with trust assets. Living trusts are often set up so that when the trustee dies, there is a “backup trustee” ready to take over and control the assets in the trust and take over as beneficiary.

Living trusts are commonly used to dodge probate issues. Assets in a trust that passes right from one trustee to another do not get distributed through intestacy or through a will. Here, the whole point of the trustee is to give them the assets in the trust rather than relying on them to manage the trust.

Things to Consider When Selecting an Estate Trustee in Maryland

Choosing a trustee to manage an estate is a very important decision. The trustee will have a lot of responsibility placed on them, and they will need to know how to do their job effectively. For that reason, our lawyers have noted some important things to consider when determining who to appoint as a trustee for your estate needs.

Integrity

The person that you appoint as trustee needs to have a strong sense of duty and integrity, as they are going to be managing another person’s assets after that person has passed on and can no longer protect their worldly assets.

Legal Knowledge

Ideally, a person appointed as trustee will have some level of knowledge of how Maryland estate and trusts laws work. While, in many cases, trustees are also attorneys, that is not a requirement. It is completely fine if the prospective trustee merely has knowledge of how relevant laws affect estates and trusts or even consults with an attorney on important issues.

Organization

Managing an estate trust is a lot of work. There are many moving parts to keep track of during the process. Accordingly, effective organizational skills are critical to managing a trust for an estate in Maryland.

Communication

Trustees will often communicate with many different entities. Accordingly, it is very important that a prospective trustee have good communication skills so that they can effectively carry out the wishes of the deceased.

Neutrality

Especially for estate and probate trusts, people may want to appoint family members to manage a trust. This may have some unintended consequences, especially if the person appointed as trustee stands to benefit from the estate. While there is no rule prohibiting beneficiaries from also being trustees, it may not be ideal in all circumstances. Accordingly, it is good practice to pick a trustee who is able to remain neutral and impartial in all estate proceedings. This may end up being expensive, though, so you might want to discuss the pros and cons of appointing a neutral party with our attorneys.

Contact Our Maryland Trusts and Estate Lawyers Right Away

Rice, Murtha & Psoras has Rockville, MD trusts and estate attorneys ready to help you when you call (410) 694-7291.