Family Trustees

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 05, 2024

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Definition of Family Trustees

Family trustees are individuals appointed by a trust creator, also known as a grantor or settlor, to manage and administer a family trust.

A family trust is a legal arrangement where the grantor transfers assets to the trust, which is then managed by the trustees for the benefit of the trust's beneficiaries, typically family members.

The role of a family trustee is to ensure that the trust is managed in the best interests of the beneficiaries, in accordance with the terms of the trust and relevant laws.

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Family trustees are individuals or institutions tasked with managing a trust's assets for beneficiaries. Their role involves making investment decisions, distributing assets according to the trust's terms, and ensuring legal and tax compliance. Choosing a reliable trustee is crucial, as they hold fiduciary responsibility to act in the best interest of the beneficiaries.Opt for individuals who possess strong financial acumen and impeccable integrity. Additionally, consider appointing a co-trustee, such as a trusted family member alongside a professional advisor. This approach balances intimate family understanding with technical proficiency, ensuring both personal and professional oversight.

Contact me at (936) 899 - 5629 or [email protected] to discuss how we can achieve your financial objectives.


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Key Functions of a Family Trustee


Managing Assets

Investment Management

Family trustees are responsible for overseeing the trust's investments, ensuring they are aligned with the trust's objectives and risk tolerance.

This includes selecting and monitoring investment portfolios, rebalancing assets, and making prudent investment decisions.

Real Estate Management

Family trustees may also be responsible for managing the trust's real estate holdings, which can include residential, commercial, or agricultural properties.

This involves property maintenance, leasing or selling properties, and handling property taxes and other expenses.

Business Interests

If the trust includes business interests, family trustees must oversee these assets, ensuring they are managed effectively to maximize profitability while adhering to the trust's objectives.

Administering the Trust

Following the Terms of the Trust

Family trustees must adhere to the terms set forth in the trust agreement, ensuring that trust assets are used for their intended purposes, as specified by the grantor.

Record Keeping and Reporting

Family trustees are responsible for maintaining accurate records of the trust's financial activities, including asset management, distributions to beneficiaries, and expenses.

They must also prepare and submit annual reports to beneficiaries, detailing the trust's performance and activities.

Filing Taxes

Family trustees must ensure that the trust complies with all tax obligations, including filing federal and state income tax returns and paying any taxes owed.

Distributing Assets to Beneficiaries

Discretionary Distributions

Family trustees may be granted the authority to make discretionary distributions to beneficiaries, providing financial support as needed and in accordance with the trust's terms.

Required Distributions

In some cases, the trust agreement may mandate specific distributions to beneficiaries, either as a fixed amount or based on a predetermined schedule. Family trustees are responsible for ensuring these distributions are made in a timely and accurate manner.

Communication with Beneficiaries

Family trustees must maintain open lines of communication with beneficiaries, addressing their concerns and keeping them informed about the trust's activities and performance.

Legal and Regulatory Framework

Fiduciary Duties

Duty of Loyalty

Family trustees must act in the best interests of the trust and its beneficiaries, avoiding conflicts of interest and self-dealing.

Duty of Care

Family trustees must exercise diligence and prudence in managing trust assets, making informed decisions, and seeking professional advice when needed.

Duty of Impartiality

Family trustees must treat all beneficiaries fairly and impartially without favoring one beneficiary over another.

State and Federal Laws Governing Trusts

Uniform Trust Code (UTC)

The UTC provides a standardized set of rules for trust administration, which has been adopted in some form by many states.

State-specific Trust Laws

Each state may have its own trust laws that govern the creation, administration, and termination of trusts, which family trustees must understand and comply with.

Tax Implications

Family trustees must be aware of the tax implications of trust activities, including income, capital gains, and estate taxes, as well as state-specific tax laws.

Selection Process for Family Trustees

Criteria for Choosing a Family Trustee



A family trustee should be someone the grantor and beneficiaries can trust to act in their best interests and manage the trust responsibly.

Financial Expertise

A family trustee should have a strong understanding of financial and investment matters, as well as experience managing assets.

Communication Skills

A family trustee should have excellent communication skills to effectively interact with beneficiaries, professionals, and other parties involved in the trust administration.

Availability and Commitment

A family trustee should have the time and commitment necessary to fulfill their duties and responsibilities.

Challenges and Solutions for Family Trustees


Balancing Family Dynamics

Conflict Resolution

Family trustees must be skilled at resolving conflicts between beneficiaries or between themselves and beneficiaries, ensuring the trust's objectives are met and family harmony is preserved.

Maintaining Confidentiality

Family trustees must respect the privacy of beneficiaries and keep sensitive trust information confidential, preventing potential conflicts or misunderstandings.

Addressing Beneficiaries' Concerns

Family trustees must be responsive to beneficiaries' concerns and needs, providing support and guidance while maintaining a professional relationship.

Navigating Complex Trust Structures

Trust Administration

Family trustees must be well-versed in the intricacies of trust administration, ensuring they can effectively manage complex trust structures and comply with all legal and regulatory requirements.

Asset Protection Strategies

Family trustees should be knowledgeable about asset protection strategies, such as shielding assets from creditors or lawsuits, and ensuring the trust's assets are preserved for the benefit of the beneficiaries.

Legal and Tax Compliance

Family trustees must be aware of the legal and tax implications of trust activities, ensuring they comply with all relevant laws and regulations.

Continuity and Succession Planning

Training and Mentoring

Family trustees should invest in their own professional development, as well as train and mentor successor trustees, ensuring a smooth transition of trust administration responsibilities.

Selecting a Successor Trustee

Family trustees must plan for the eventual transition of their duties to a successor trustee, carefully considering the qualifications and suitability of potential candidates.

Implementing Contingency Plans

Family trustees should have contingency plans in place to address unexpected events or emergencies, ensuring the trust's assets and beneficiaries are protected.

Bottom Line

The role of family trustees is crucial in effectively managing a trust, preserving family wealth, and maintaining harmony among beneficiaries.

Their primary responsibilities include managing assets, administering the trust, and distributing assets to beneficiaries while adhering to their fiduciary duties.

Selecting the right trustee is critical, and factors such as trustworthiness, financial expertise, communication skills, availability, and commitment should be considered.

Family trustees face various challenges, including balancing family dynamics, navigating complex trust structures, and ensuring continuity and succession planning.

By addressing these challenges and focusing on effective communication, adherence to legal and regulatory requirements, and professional development, family trustees can ensure the long-term success of a family trust and provide support to its beneficiaries for generations to come.

Family Trustees FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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