For those asked to serve as trustee for someone, you have a very important job ahead of you. In fact, the role of trustee is a vital element of successful trust administration. The trustee is the one who is responsible for certifying that the provisions of the trust are followed. A trustee is ultimately accountable for managing the trust property and keeping true records of all transactions. This is a tremendous responsibility and there are a few mistakes you must try to avoid.
Failing to abide by to your fiduciary duty
Trustees are required to administer the trust and trust property while keeping only the best interests of the beneficiaries in mind. Trustees are also required to follow specific regulations, such as the Uniform Prudent Investor Act, a law that was designed to protect beneficiaries from unsuitable investment choices. For the trustee, this means that you can be held personally responsible for any improper investments or missed investment opportunities or profits that beneficiaries could have enjoyed if you had been more practical in your investment choices.
Foregoing professional assistance when you need it
In light of the significant responsibility trustees must shoulder, it would clearly be wise to obtain help or advice from a professional when you need to. This is especially true when it comes to making investments. In fact, managing investments is one of the most highly litigated issues in trust administration. If any disagreement arise regarding the terms of the trust and beneficiaries take legal action, trust administration can be very costly and time consuming. The result is that a significant amount of the trust assets could potentially be wasted on legal fees.
Not remaining an impartial party
Being a fiduciary means that you must be capable of looking past your own interests or the interests of any one person in particular. You must instead comply with the terms of the trust in all of the decisions you make and actions you take in accordance with those terms. However, this is not always easy when you may be related to a beneficiary or have emotional ties to the family, generally. Regardless, as a trustee, you must remain neutral at all times in everything you do in compliance with the trust.
Not providing a complete accounting
The fiduciary duties of a trustee carry with them the need to deliver complete and accurate records of all transactions that involve the trust property. Based on many reports, there has been an increase in the frequency of lawsuits surrounding trusts and trust administration. Therefore, it is critical that a trustee remain aware of the range of his or her duties and understands the possibility of personal liability. Every decision made on behalf of the trust property must be documented, especially decisions regarding distributions of assets. That way, if a dispute does arise, you will be equipped to defend your decisions and protect yourself from personal liability.
Forgetting to discuss your compensation
Generally speaking, trustees are entitled to be paid a fee for their services. Determining a reasonable fee is different depending on which state’s laws apply. Not all trustees request a fee. In fact, when there is a relationship between the trustee and the grantor, the trustee may not accept a fee. Corporate trustees, though, have published fee schedules, but an individual trustee has the opportunity to negotiate a reasonable fee for their services. However, if you do not discuss fees up front, when the issue of compensation comes up later on, it may be necessary to go to court to resolve the issue.
If you can’t avoid these mistakes, you may need a Los Angeles trusts attorney
When mistakes are made sometimes the matter needs to be resolved in court. Trust litigation is a specialized area of the law. In many cases, trust litigation will require multiple petitions based on separate claims. For instance, petitions may be required regarding financial elder abuse, capacity issues, undue influence claims, creditor’s claims, and probate. In order to be successful in pursuing all of these legal claims, you need Los Angeles trusts attorney.
Join us for a FREE seminar! If you have questions regarding trusts, or any other estate planning needs, please contact the Schomer Law Group for a consultation, either online or by calling us at (310) 337-7696.
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