Trust administration requires a responsible trustee to keep the process moving in the right direction. One question that clients often ask is whether they can appoint their trust lawyer as their trustee. There are a few ethical considerations, including conflicts of interest and fiduciary duty which should be thought through. Here is some good information that may help you make this particular decision.
Choosing your trustee to handle your trust administration
The trustee serves a crucial role in trust administration. For that reason, choosing the right trustee is extremely important. The way a trust operates, the trustee will be given authority over your financial affairs and personal matters, under the terms of the trust. Therefore, you should choose a trustee who you believe is trustworthy, competent and knowledgeable about the types of issues a trustee would need to handle.
Choosing trust lawyers can be a good choice
When you are trying to choose someone to serve as a fiduciary, a lawyer is always a good option. A “fiduciary” is “a person who has the power and obligation to act for another . . . under circumstances which require total trust, good faith, and honesty.” Additionally, a lawyer would have specialized ability and experience that can be extremely beneficial. When your living trust lawyer serves as a trustee of your living trust, he or she will already be familiar with trust administration in general, the terms of the trust document, as well as your particular situation.
What does it mean to be a fiduciary?
As a fiduciary, your trustee has a duty is to take only those actions that are for the benefit of the trust and its beneficiaries. He or she must always be honest in all dealings related to the trust. Trustees are also required to make sure all of the actions they take comply with relevant laws and regulations. Ultimately, a trustee is expected not to violate their duties, and if they do, they can be held liable for those violations.
Disclosures need to be made
Whenever there is a possibility for a conflict of interest, there are certain disclosures that should be made to the client, in order to prevent a conflict of interest from arising. However, your estate planning attorney will be very familiar with the professional ethics requirements in the area where he or she practices and should be able to avoid any possible issues before they arise.
Can my attorney recommend that she serve as trustee?
It is generally appropriate for a lawyer to inform a client that the lawyer is available to serve as trustee of a trust the lawyer assisted the client in creating. The primary concern is that the lawyer avoids self-interest, and presents his availability as only one of many options the client can consider. The lawyer maintains a duty to suggest the best choice for trustee to the client, depending on that client’s particular situation.
Informed consent alleviates most issues
The key is to provide informed consent. The living trust lawyers must provide the client with sufficient information so they can determine for themselves whether having their attorney serve as their trustee is the best choice. This means the lawyer will communicate all of the possible issues that could arise, as well as all alternatives, so the client can decide. Once the client has a good understanding, then the client can agree to allow the attorney to serve as trustee.
It is common for non-professional trustees to seek advice
Even if you do not choose a trust lawyer to serve as your trustee, it is not uncommon for non-professional trustees to seek the advice of other knowledgeable professionals. In the face of the significant responsibility placed upon a trustee, it is very common for trustees to need advice or assistance from a professional as they carry out certain aspects of their responsibilities. This is most likely the case when it comes to investing the trust property. If you do not have experience with investments then it would be wise to seek the advice of a professional. The management of investments is the probably the most frequently litigated issue in Los Angeles trust administration.
Download a FREE estate planning worksheet today! If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.
#estateplanning, #schomerlawgroup, #trustadministration
- Things You May Need to Update in Your Estate Plan When You Enter Retirement - March 22, 2023
- 10 Estate Planning Tips You Cannot Afford to Ignore - March 21, 2023
- 7 Estate Planning Steps for the Beginner - March 16, 2023
