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Jun 27, 2023 · Learn how to resolve trustee and beneficiary conflicts, trustee roles and responsibilities, and the steps beneficiaries should take to protect their assets. Trustee relationships can be complicated. Trustees not only manage assets, but they also must ensure that beneficiaries' needs are met.
- By James L. Cunningham Jr, Esq.
- Trap #2: Trustees Failing to Take Action in A Timely Way
- Trap #3: Trustees Failing to Consider The Emotional Landscape
- Trap #4: Trustees Failing to Communicate with Beneficiaries
- Trap #5: Trustees Ignoring A Beneficiary’S Rights
- Trap #7: Trustees Not Doing What’s “Reasonable” in The Eyes of The Law
- Trap #9: Unintentionally Becoming Untrustworthy in The Eyes of Beneficiaries
- Trap #10: Relying on The No-Contest Clause in A Trust For Protection
- Trap #12: Not Planning For Court Delays
- Bonus Trap #13: Missing Court Dates and Blowing Off Mediation
Is it an honor to be named the successor trustee of a trust created by your parents or other loved ones? When asked, shouldn’t you always say yes? Frankly, no! Certainly, someone needs to settle your family’s affairs after a death and distribute the assets fairly. That someone might be you—but only say yes when you know what you’re getting into. Ma...
As you serve in the role of trustee, you have to take actionand take it in a timely way. You can’t just sit back. Too often, there are things you just didn’t know you had to do: file for a new Tax Identification Number (TIN), locate a sibling, pay a tax, document a property value at the time of death, petition to include something in the trust that...
In every legal situation, one must deal with both laws and human beings – which means a lot of emotions. Every family is different, and you must step back to take a clear-headed assessment of the emotional landscape that’s now your job to manage. Your obligations as trustee are to the trust and to the trust’s beneficiaries (the people who inherit u...
One way to minimize trustee risks and avoid conflict with the beneficiaries of a trust is to communicate with the beneficiaries. After a death, it’s crucial for all family members to understand what will happen next, and who is in charge as the successor trustee to the living trust. In other words, everyone must talk. Indeed, good communication is ...
Let me repeat: trustees have obligations, while beneficiaries have rights. Trustees are frequently punished for breaching their duties. Beneficiaries are rarely if ever punished for exercising their rights. That’s why it’s absolutely crucial that you understand trustee responsibilities to beneficiaries. Say that mom has two kids, a son who lives ac...
Given all the above dangers, what standard will you be held to by law? A trustee is generally held to the standard of a “reasonable man”—a term which as of this writing has yet to be changed to “reasonable person.” This American legal concept applies to contracts and torts (from the French word for “wrong”) as well as trusts. As a trustee, you are ...
If you have vigilant beneficiaries, they will be carefully watching your every move. If you do a single, minor thing wrong—nothing egregious—their faith in you may suddenly evaporate, and a whole lifetime of good relationships may turn sour. Don’t mislead anyone about anything. Don’t do anything significant without considering communicating with ev...
Many trusts include a “no-contest” clause stating that anyone who challenges the validity of the trust in court will no longer be entitled to be a beneficiary and will lose any inheritance. Such clauses try to discourage nuisance lawsuits by beneficiaries who think they’ve been wronged. No-contest clauses don’t do anything to protect the trustee. T...
If all goes smoothly as a trustee and everything was properly put in the trust, you may not have to deal with courts at all. But if you do, realize that states, courts, and everything legal can be subject to serious and unexpected delays. That means you have to plan cash flow accordingly and manage the expectations of beneficiaries. You also have t...
One extra trap I have to bring up. If someone challenges your trusteeship, the trust, or accuses you of something and you end up in court, do not ever miss a court date. Ever. Period. And if the court orders mediation, follow through! What is mediation? Let’s say someone files a lawsuit. Instead of going to trial, the parties get together to see if...
May 10, 2024 · Losses Due to Negligence: Mistakes or mismanagement by the trustee that lead to trust losses may result in liability for damages. Legal Costs: Legal actions stemming from the trustee’s actions can incur significant legal fees and expenses.
Jun 18, 2020 · Even the most conscientious of trustees can make mistakes, they are only human. In the event of a breach, they can seek to have transactions set aside. When deciding if a trustee is in breach, the court will apply an objective test: they will ask what a reasonably prudent trustee would have done in the circumstances.
Sep 8, 2023 · Where a trustee has, by mistake, made an overpayment to the beneficiary, he may reimburse the trust property out of the beneficiary’s interest. If such interest fails, the trustee is entitled to recover from the beneficiary personally the amount of such over-payment.
Apr 28, 2022 · If a Trustee does make a mistake during the administration of a trust it could result in liability to a third party and/or to the beneficiaries of the trust. As the Trustee, you will have to interact with third parties on a regular basis, particularly about investments made by the trust.
People also ask
Can a trustee make a mistake?
Does a trust have a 'law of mistake'?
What is the duty of a trustee?
How can a trustee avoid conflict with the beneficiaries of a trust?
Aug 27, 2023 · Briefly speaking the duty of a trustee is an obligation the failure to fulfill that will hold the trustee to legal liability for the breach of trust. It must always be remembered that a trustee cannot deal with trust property as an absolute owner can deal with his own property, his powers are always fiduciary.
