During the process of administering a trust, trustees face many responsibilities. One such responsibility is to manage and safeguard trust assets. These assets include checks received in the name of the trust. As the trustee, it is crucial that the check be properly deposited and accurate records kept.
4 Steps for Dealing With a Check Made Out to the Trust During Trust Administration
What should you do if you receive a check in the name of the trust while serving as trustee? The following is an overview:
- Deposit the check into the trust’s bank account.
- Endorse the check by signing your name and indicating that you are the trustee of the trust. For example, you may need to sign the check as follows: “Susan Smith, Trustee, John Smith Revocable Trust.” The signature of only one trustee is required to deposit the check even if there are co-trustees serving under the trust instrument.
- Keep accurate records regarding any interest that is earned on the money deposited into the trust’s bank account. Once the trust becomes irrevocable, annual income tax returns must be filed if more than $600 in income is earned by the trust in a given year. The trust must also have its own federal tax identification number.
- Trustees should also keep complete and accurate records relating to the check and the bank account. Trustees are required to provide regular accounting of trust funds, which includes reporting income received by the trust.
Understanding all of your duties and responsibilities as the trustee of a trust can feel overwhelming for those without prior experience. Fortunately, you do not have to carry out these duties alone. We encourage you to contact us today at (714) 459-5481 for assistance.