What’s the Difference between a Trustee and a Beneficiary?

When it comes to setting up a trust as part of your estate plan, it’s essential to understand the different roles involved—especially the trustee and the beneficiary. Knowing the responsibilities and rights of each can help avoid confusion and conflict down the road. Whether you’re naming someone to oversee your trust or have been named yourself, working with a trust attorney near me can make all the difference in getting it right.  This article provides a guide to Jacksonville residents for understanding the roles involved in trust administration.

What Is a Trustee?

A trustee is the person or institution responsible for managing the trust’s assets. This role comes with significant legal obligations, including the fiduciary duty to always act in the best interest of the trust’s beneficiaries. That means making prudent financial decisions, keeping accurate records, and sticking closely to the instructions outlined in the trust document.

What are the Key Duties of a Trustee?

Many of our new Jacksonville clients come to us feeling overwhelmed when they are named as a trustee. It’s a big responsibility, but it can be manageable if you’re organized and know when to ask for help.

• Understand the Trust Document: Before doing anything else, a trustee must read and understand the trust. It spells out exactly what they’re responsible for and how they should manage and distribute the assets.
• Keep Records: Trustees are responsible for accounting—tracking every transaction, investment, distribution, and expense.
• Communicate: Regular updates to beneficiaries are crucial. Silence breeds suspicion; open communication builds trust.
• Manage Assets Wisely: Trustees must act prudently, avoiding high-risk decisions and always prioritizing what’s best for the beneficiaries.
• Seek Help When Needed: Many trustees consult professionals like financial advisors or attorneys to ensure compliance with complex tax and legal requirements.

What Is a Beneficiary?

A beneficiary is the person (or people) who receives the benefits of the trust—usually in the form of money, property, or other assets. Beneficiaries don’t control how the assets are managed, but they do have legal rights to the trust’s assets and operations. Read more about trust beneficiaries in our articles: Protecting Young Beneficiaries with Pot Trusts: A Guide for Jacksonville Parents and Risks of Naming a Special Needs Beneficiary for Retirement Plans or Life Insurance Policies

Rights of a Trust Beneficiary:

• Access to the Trust Document: Beneficiaries are entitled to know the terms of the trust.
• Transparency: Trustees must keep beneficiaries informed through annual reports and accountings.
• Right to Challenge: If a beneficiary believes the trustee is mismanaging the trust, they can petition to have them removed.
• Right to Distributions: Beneficiaries can receive trust income or assets according to the terms set by the trust creator.

Trust beneficiaries should feel empowered to ask questions and request documentation. Good communication between the beneficiary and trustee helps reduce suspicion and the potential for costly disputes. A qualified trust attorney near me can help guide a trustee on how to have clear and regular communications with the beneficiaries.

Can a Trustee Also Be a Beneficiary?

Yes, and it happens more often than you might think. For example, a parent may name their adult child as both trustee and beneficiary. However, this dual role comes with extra scrutiny. The trustee still has to act in the best interest of all beneficiaries, not just themselves.  Just because you are both a trustee and also a beneficiary doesn’t mean you can do whatever you want with the trust assets. You still have to follow the rules and act responsibly. If you’re considering this structure, it’s smart to consult a trust attorney near me to ensure the plan is solid and will hold up legally.

How a Trust Attorney Can Help

Whether you’re the person creating a trust or someone named in one, working with a knowledgeable estate planning attorney is a smart move. A good attorney can:

• Help you understand your role as a trustee or beneficiary
• Clarify legal responsibilities
• Draft or review trust documents
• Offer guidance if conflicts arise

Jacksonville residents trust the guidance and knowledge of the trust planning team at Legacy Planning Law Group. If you’ve just been appointed a trustee or are a trust beneficiary, schedule a discovery call with Team Legacy to get the support you need for navigating the trust terms and administration.

Key Takeaways

• A trustee manages trust assets, while a beneficiary receives benefits from the trust.
• Trustees must follow the trust’s instructions, act in beneficiaries’ best interest, and communicate regularly.
• Beneficiaries have the right to transparency, information, and fair treatment.
• A person can serve as both trustee and beneficiary but must still meet fiduciary standards.
• Professional help from a trust attorney near me can ensure peace of mind and legal compliance.

Reference: SmartAsset (March 2, 2023) “Beneficiary vs. Trustee: Estate Planning Guide”