A trust which is created in a Last Will & Testament is often referred to as a “Trust Under Will.” This is commonly abbreviated as “TUW.” Such a trust might be created by a grandparent for a grandchild, or it might be created as a security measure by parents for their children. There are other reasons that testamentary trusts (another name for a trust created in a Last Will & Testament) are created, but these are two of the more common reasons.
A person appointed as the trustee of a testamentary trust must first gather the assets which are to make up the corpus of the trust. This is a first step in administering the trust. Administration of a trust also requires the trustee to create a full inventory of the trust assets. This is often much easier than it sounds, especially if the trust assets are all financial holdings. The trustee’s financial advisor or accountant can assist with this step.
The trust will have a purpose and beneficiaries. The trustee must be sure that he or she understands the purpose of the trust, and that he or she knows the identity of the beneficiaries. The Trustee is not working for himself or herself…the work is all for the purpose as the trust’s grantor (the person who created the trust, usually the decedent in whose Last Will & Testament the Testamentary Trust was created) and for the benefit of the Testamentary Trust’s beneficiaries. A Trustee’s loyalty must be there, to the purpose and beneficiaries, in an even-handed manner.
Trustees are expected to prudently invest trust property in a way that that first protects trust assets and thereafter generates income for the Trust beneficiaries. The day to day management of the Trust assets may be assigned to a professional, like a financial advisor. The Trustee, however, is ultimately responsible for the Trust assets.
The Trustee, with the aid of an accountant, must be able to provide a full accounting of the trust assets. The Trustee must follow the language of the Trust and be ready to make distributions to the Trust beneficiaries at the proper times.