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Trustees: Keeping detailed records is critical

Taking on the role of a trustee is a great responsibility. In the past, we have discussed the particular legal duties that trustees have when administering a trust in California. However, another essential task all trustees should complete is keeping records throughout the entire process of the trust administration.

Organizing a system to maintain records is important to avoid legal disputes and liability, but also to ensure that trustees accomplish all of their duties.

So, here is a brief overview of some of the items that trustees should document.

Keep and update an inventory of the trust assets

When the creator of the trust passes away, the trustee should determine the value of the assets held within the trust and document this in their personal records and with the court.

It is also critical to update this inventory whenever a beneficiary receives assets. These updates should detail:

  • How much the beneficiary received;
  • When they received it; and
  • How much remains within the trust.

For example, the beneficiary of a special needs trust often receives a monthly income, so to speak, from the trust. Therefore, the trustee must ensure that they update the inventory of the trust every month in coordination with this.

Obtain copies of all relevant documents

In addition to their inventory, trustees should obtain and organize copies of official documents, including:

  • A copy of the trust itself and any amendments to the trust
  • Any legal documents pertaining to the trust
  • Deeds to real property owned by the Trust
  • Documents pertaining to ownership, value, or insurance for any trust asset
  • Bank or account statements
  • Tax documents or returns
  • Receipts from any expenses from the trust

This allows the trustee to easily reference these documents if necessary.

Monitor documentation of all decisions

Trustees need to keep a record of every decision they make regarding the trust. Individuals can choose what they wish to include in this log, but it is helpful to include:

  • Details of the decision-making process;
  • Reports from professionals that provided information necessary for the decision
  • Records of interactions with beneficiaries about this decision; and
  • Their reasoning behind the decision.

Therefore, if there are any disputes or questions about a trustee’s decision, they have direct documentation of their decision to avoid legal issues or liability.

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