Many people are nominated as trustees of their friend or relative’s living trust. Most of those who are nominated have never acted as trustee during a trust administration. With this inexperience, brings inadvertent errors and potential for liability.
In California, a trustee has many duties and responsibilities. As a fiduciary, the trustee cannot treat the trust estate as his own. It has to be managed professionally, objectively, and separately from the trustee’s personal estate. Decisions need to be made for the benefit of the beneficiaries. Even if the trustee is a beneficiary, he cannot consider his own personal wishes when serving as trustee.
One beneficiary cannot be given preference over another, as all beneficiaries need to be treated impartially. It is best to keep communications on equal ground, as well. Let a professional work with you to guide you through how best to meet all of the legal responsibilities and duties.
Record keeping is very important. If proper accounting records are not kept, a trustee won’t be able to prepare accurate tax returns which can bring liability at state and federal tax levels, besides the liabilities associated with breaching fiduciary duties, damages, and contempt orders.
Given the importance and liabilities connected to the office of trustee, it is best advised for the trustee to seek appropriate counsel from professional advisors, such as legal, financial, and tax. It is too easy to overlook this aspect when you are related to the trust creator and other beneficiaries. This role needs to be approached professionally. If you make decisions as trustee based upon your position as a brother, sister, or aunt, you face liability and further cost and expense for actions deemed to breach your fiduciary duty.
When considering if you should consent to the nomination as trustee, consider all aspects. How much time you have in your schedule, the relationships you have with beneficiaries, how well organized the estate is, will omitted beneficiaries potentially contest the trust, what types of assets are in the estate? These questions, along with many others, should weigh in to your decision to accept the nomination.
Remember, it is a job to be a fiduciary, not a benefit. It seems some confuse the job of serving as trustee with being a beneficiary of the estate. They are different. You can decline to act as trustee, yet still be a beneficiary of the estate. Don’t put yourself in a position of legal responsibilities that you are not willing or able to deal with for the near future.
For further discussion or questions about an estate, contact Jackie Marie Howard, Roseville trust attorney at (916) 773-7373 or www.JackieMarieHowardLaw.com.
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