Naming someone as trustee of your living trust is quite possibly one of the most difficult decisions you’ll ever make. The trustee is involved in just about every aspect of the administration of a trust; and although it is considered a great honor, it can also be a great responsibility.
Most people choose someone close to them to serve as trustee: a best friend, son or daughter, brother or sister. Choosing someone who knows you and your family to serve in this role can be beneficial in many ways, but if that person doesn’t have a financial or legal background the responsibilities can be overwhelming! It is important that the person you nominate as trustee knows not only what is expected of trustees in general, but also knows what you expect of them as a trustee. For this reason, you may want to consider giving your nominated trustee these 5 Basic Tips for Trustees—and don’t forget to add your own personal requests as grantor.
1. Make sure you read and understand the entire trust document. If you don’t have a legal background it is okay (preferable, in fact) to ask for help from an attorney.
2. Always remember that the beneficiaries of the trust are your first priority and responsibility. Once you are trustee you have what is called a “fiduciary duty” to always act in the best interests of the beneficiaries.
3. Make sure that the trust has its own separate checking account. If the trust is a living trust you as trustee will likely be the person who creates that separate account after the death of the grantor. Under no circumstances should a trustee mingle personal finances with trust finances.
4. Maintain regular contact with the beneficiaries; not just to provide them with regular accountings of trust activity or investments, but also so you yourself can remain aware of the lifestyle, needs, and feelings of all the beneficiaries.
5. Be sure you have a support team that will benefit the trust and the beneficiaries. Get investment advice from a financial professional; have a trusted attorney help with any legal questions you might have; hire a mediator to help if there are irreconcilable differences amongst the beneficiaries. The goal here is not to spend the trust funds frivolously, but to protect and preserve trust assets as the grantors would have wished for their beneficiaries.
Ilene has assisted many a trustee in maneuvering through their duties. She also offers training for current and future trustees several times each year. Ilene’s next Trustee Workshop is scheduled for September 14, 2012. If you would like to attend, or want to send your trustee to the training, please call Kathie at 480-296-2036, or you may register online by following the directions on the side bar.
Ilene L. McCauley and Frederick H. Goldinov are licensed to practice law in the State of Arizona. The law firm of Goldinov & McCauley, PLC provides legal services for clients in the State of Arizona. The information provided on this website and our blog is general and educational in nature and should not be construed as legal or tax advice, nor does the use of the website create an attorney/client relationship. Laws of specific states or laws relevant to a particular situation may affect the applicability, accuracy or completeness of this information which cannot take the place of one-on-one personal legal consultation and advice. Federal and state laws and regulations are complex and subject to change. No legal representation is created, and we make no warranties with regard to the information or results obtained by its use. Neither the authors nor anyone forwarding or reproducing this work shall have any liability or responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly, by the information contained in this website or blog.