When you name someone as your Personal Representative, Trustee, or Agent, you ask them to take on legal duties. These duties protect the people who will benefit from your plan.
This article explains what those duties mean in practice. It can help you choose the right people, and help them understand what they are agreeing to.
Why these duties matter
Someone who manages money or property for another person is called a fiduciary. The law holds a fiduciary to a high standard. They must put the beneficiaries first, act carefully, and follow your instructions.
Knowing these duties helps you picture each person in the role. A kind and trusted friend may still find the record-keeping or the hard conversations difficult.
For help deciding who to name, see this article.
Key terms
- Fiduciary: A person or company that manages money or property for someone else and must act in that person’s best interests.
- Beneficiary: A person who receives property from your estate or benefits from a trust.
- Personal Representative: The person who settles your estate after your death, also called an executor.
- Trustee: The person or company that manages a trust and makes distributions from it under the trust’s terms.
- Agent: The person you name in a Durable Power of Attorney to handle your finances if you cannot.
The core duties
Most of these duties apply to every fiduciary role. The examples below use a Trustee, because a Trustee often serves the longest and faces the hardest choices.
Follow the terms of the trust
The Trustee must carry out the instructions in the trust, not their own ideas about what is best. Sometimes that means saying no. If a beneficiary asks for money the trust does not allow, the Trustee must decline, even when it is uncomfortable. A Trustee who cannot say no to a family member may not be the right choice.
Loyalty
The Trustee must act only in the beneficiaries’ interests. They cannot use trust money for themselves or make deals that benefit them at the beneficiaries’ expense.
Fairness among beneficiaries
Many trusts serve more than one person. Some benefit now, and others benefit later. For example, a surviving spouse may receive income for life, with the rest going to the children. The Trustee must weigh how a distribution to one beneficiary affects the others, now and in the future. This is harder still when the Trustee is also a beneficiary.
Care and good judgment
The Trustee must manage the trust with reasonable care and skill. That means staying informed, making thoughtful decisions, and asking for help when a question is beyond them.
Invest to meet the beneficiaries’ needs
The Trustee must protect the trust’s property and invest it as a careful investor would. That does not mean avoiding all risk. It means fitting the investments to the trust’s purpose. A Trustee thinks about:
- How long the trust will last. Money for a child’s college in five years should be invested differently from money meant to last a lifetime.
- Income and growth. A surviving spouse may rely on income now, while the children who inherit later benefit from growth. The Trustee must balance the two.
- Cash for distributions. The trust needs enough available to cover the distributions it is likely to make.
- Spreading the risk. Most trusts should not have too much in a single stock, company, or property.
- Costs. Fees for advisors and funds should be reasonable for what they provide.
- Special property. A family home, cabin, or business may not fit normal investment rules. Your trust can say whether the Trustee may keep it.
A Trustee does not need to be an investment expert. Many hire a professional advisor. The Trustee still decides on the overall plan, reviews it at least once a year, and makes sure it still fits the beneficiaries.
Keep beneficiaries informed
Soon after taking on the role, the Trustee must tell the beneficiaries that the trust exists and how to reach the Trustee. After that, the Trustee must keep them reasonably informed, answer reasonable questions, and give a beneficiary a copy of the trust when asked. In Oregon, the Trustee must also send current beneficiaries a written report at least once a year.
Being open usually prevents problems. Beneficiaries who know what is happening are less likely to suspect the worst. While you are living, the beneficiaries of your Revocable Trust are not entitled to this information.
Your trust can also limit or change some of these notice and reporting rules. If you have concerns about what your beneficiaries will be able to see, talk this through with your attorney.
Keep records
The Trustee must keep clear records of money coming in, money going out, and every distribution. Good records are also the Trustee’s best protection if a beneficiary later questions a decision.
Get help when needed
The Trustee can hire professionals, such as an accountant, an attorney, or an investment advisor. But they must choose them carefully and keep an eye on their work. The Trustee stays responsible.
What the job looks like day to day
The duties above turn into practical tasks. A Trustee usually needs to:
- Open a separate bank account for the trust, and never mix trust money with their own
- Keep receipts and records of every transaction
- Make sure the trust’s tax returns are filed each year, usually with help from an accountant
- Help a beneficiary plan a budget, so distributions meet real needs and the trust lasts
- Review the investments with the beneficiaries’ needs in mind
- Stay in touch with the beneficiaries and answer their questions
A Personal Representative has similar tasks for a shorter time, such as opening an estate account, paying bills, and filing final tax returns. An Agent keeps your money separate from their own and keeps records of what they do for you.
When beneficiaries or family make it hard
Many Trustees find the people harder than the paperwork. A beneficiary may ask for too much. Siblings may not get along. A second spouse and stepchildren may have different interests. Some practical habits help:
- Apply the same standard to every request, so decisions are consistent and fair.
- Explain decisions, especially a no, and point to what the trust says.
- Put important decisions and the reasons for them in writing.
- Stay neutral, even when the Trustee is also a family member or beneficiary.
- Ask an attorney for advice when a situation is unclear or tense. If needed, a court can give the Trustee instructions.
Your plan can help, too. If you expect conflict, you might name a professional Trustee, or a family member to serve alongside one. A letter explaining your wishes can also guide the Trustee and help family members understand the choices you made.
For more on blended families and trusts for a spouse, see this article.
If a fiduciary does not follow these duties
The law gives beneficiaries ways to protect themselves. A court can remove a fiduciary who breaks these duties and order them to repay any losses. An honest mistake is treated differently from deliberate wrongdoing. Most fiduciaries who keep good records and ask for help when they need it serve without problems.
Want to read more?
These articles are optional.
- Choosing the people who carry out your plan: What to look for in each role. See this article.
- Setting the rules for a trust: The terms a Trustee follows. See this article.
- Outright or in a trust: How your beneficiaries receive what you leave them. See this article.
- Questionnaire help: If you are filling in the questionnaire, see the help for the Fiduciary Choices page.
- Glossary: Common estate planning terms. See this article.
- Financial power of attorney: What your Financial Agent can do and how to choose one. See this article.