Tips for the New Trustee
If you recently learned that you were appointed to be the Trustee of a trust, and this is the first time you have served in such a capacity, you are likely somewhat intimidated by the prospect. The best way to ensure that you do not make a costly mistake in your role as a Trustee is to retain the services of an experienced trust administration attorney. To get you started, however, a Loveland trust administration attorney at Zimmer Law Office offers some tips for the new Trustee.
What Is a Trust?
Hopefully, you already have a basic concept of how a trust works and what it means to be the Trustee of a trust; however, since you will be responsible for administering a trust, it cannot hurt to learn the basics. A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker, Trustor, or Grantor), who transfers property to a Trustee. The Trustee holds that property for the benefit of the trust beneficiaries.
Tips for Administering a Trust
If you find yourself responsible for administering a trust for the first time, the prospect can be a little intimidating. The following tips may help you fulfill your duties as a Trustee without making costly errors:
- Make sure you have a very clear understanding of the trust terms. The trust terms, created by the Settlor, guide the administration of the trust. Read, and re-read, the trust agreement until those terms are clear to you. Also, make sure that you are clear on the overall trust purpose. If you have any doubts, consult an experienced trust attorney for advice and guidance.
- Invest responsibly and with caution. As a Trustee, you are required to use the “prudent investor standard” anytime you invest trust assets. This requires you to invest with caution, avoid risk at all times, and always focus on protecting the principal first and growth second. Be more careful with trust assets than you would be with your own assets.
- Document everything. One of your duties as a Trustee is to keep excellent records of all trust business. Another is to maintain communication with the beneficiaries of the trust and keep them up to date on trust business. You cannot document too much; however, you can find yourself in a position where you wish you would have documented more.
- Avoid conflicts of interest. If the Settlor appointed you as the Trustee, and you are not a professional, the odds are good that you have/had a personal relationship with the Settlor. That means you may also have a close relationship with one or more of the beneficiaries of the trust. If so, it could be easy for the appearance of a conflict of interest to arise that could threaten the success of the trust. Always be aware of that possibility and do everything possible to avoid it from occurring. If you reach the conclusion that you cannot avoid a conflict of interest, it may be time for you to resign your position and allow the successor Trustee to take over.
- Seek advice and guidance from an experienced attorney. The duties and responsibilities of a Trustee during the administration of a trust typically require at least a rudimentary knowledge of both legal and financial concepts. Unless you happen to be an estate planning attorney or financial advisor yourself, do not try to administer the trust without seeking professional guidance.
Contact a Loveland Trust Administration Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about choosing a Trustee for your trust, contact an experienced Loveland trust attorney at Zimmer Law Office by calling 513-721-1513 to schedule your appointment today.