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When An Individual Serves As A Trustee

In the most common circumstances, an aging parent decides to prepare a new Will that leaves money in trust for grandchildren and appoints a child to serve as trustee for the minor grandchildren.  Although the parent generally does not think of it in these terms, the reality is that the parent is appointing two fiduciaries – the executor and the trustee.  When the parent does so, he/she believes they are bestowing a certain honor on their child, but they are also binding them to perform their duties as a fiduciary correctly.

When an individual person (instead of a company) is appointed as a trustee, that person is best advised to retain the counsel of a good attorney, and possibly a good accountant and financial advisor.  For trustees in particular, their role may last for many years into the future.  During that time, they are going to be required to make distributions according to the terms of the trust.  They will also be required to file tax returns on behalf of the trust, invest and use the assets appropriately, and provide periodic accountings of the trust assets.

Although these duties may sound simple, most trust agreements provide a trustee with certain amounts of discretion and other amounts of restraints.  The trustee needs competent counsel in helping him/her make these decisions wisely.  In the event that the trust has multiple beneficiaries, the chances that beneficiaries may disagree increase significantly.  For instance, if one beneficiary is given a larger distribution than another, the beneficiary receiving the smaller distribution may object, even though the trustee had the discretion to do so.  A simple issue like this can spark huge litigation.

The Estate and Trust Administration attorneys at Ford + Bergner LLP routinely counsel with individuals serving as trustee of trusts.  We assist in properly interpreting the requirements under the trust, developing a distribution method targeted at sparking the least controversy with the beneficiaries, managing the routine administrative issues of the trust, coordinating with the other professionals who may also be working with the trustee, and accounting to the beneficiaries when requested.  Having solid coordination between the trustee’s lawyers and other advisers provides a consistent approach to keep the trust operating more efficiently, and the trustee will have greater comfort in discharging his/her duties.