Those who wish to protect their assets may create a trust which is a fiduciary arrangement that allows a third party (a trustee) to hold property or assets on behalf of a beneficiary. When establishing a trust account, a grantor must appoint a trustee. A trustee must be someone a grantor can trust as they will have to fulfill fiduciary responsibilities after the grantor has died. Essentially, the trustee’s main duty is to manage the assets that are transferred to the trust on behalf of the beneficiaries the grantor of the trust has named. Trustees are responsible for distributing assets in the trust to beneficiaries in the manner the grantor stipulated. As trustees are responsible for many things after a grantor dies, it makes many wonder whether a trustee can withdraw money from a trust account. Please continue to follow along to learn whether a trustee can withdraw money from a trust account and how a trusted Montgomery County Trust Attorney can help you today.
Can a trustee take money out of a trust account for their benefit?
Trustees are entitled to use trust funds to pay for certain things such as funeral expenses, repaying any debts, fees paid to professionals who help with administrative tasks, taxes owed, and expenses related to properties included in the trust. In addition, the trustee is entitled to use the funds in a trust account to make investments on behalf of the trust. However, a trustee cannot withdraw money from a trust on their behalf. It must be done on behalf of the trust. Essentially, this means the investments they make with the funds in a trust must benefit the trust and the beneficiaries. If a trustee uses trust funds for their benefit it is a breach of their fiduciary duty. Although a trustee can withdraw money from a trust account for specific things, there are limits. A trustee’s fiduciary duty requires them to comply with the grantor’s wishes, even if they are well-intentioned. If they violate their fiduciary duties by disregarding a grantor’s wishes they could be removed as a trustee.
How are funds from a trust withdrawn?
Furthermore, when a trust is created, typically a bank account is opened for the trust where the trustee can access money when needed. The trustee often only has access to this bank account. When a trustee needs to withdraw money to fulfill their duties, they can use the bank account to write checks, withdraw cash, or complete wire transfers. It is imperative to note that trustees are responsible for managing all withdrawals of money from a trust account.
If you are interested in establishing a trust fund, please don’t hesitate to get in touch with one of our determined and adept team members. We are committed to helping our clients protect their hard-earned assets.