You’re a Trustee….Now What?

We recently posted about an article that ran in the Wall Street Journal entitled, “The Trouble with Trustees,” in which the Journal described the problems that trust beneficiaries can have when clashes arise with their trustees.  While the article did a great job of describing what a trust beneficiary should do to address conflicts, it did not spend much time discussing how the trustee should handle those disputes.

In many cases, being named as someone’s trustee carries a certain level of honor.  Your parents, sibling, close friend, or trusted business associate asks you to serve as the trustee for their child, grandchild, parent, or sibling because they need someone with “good sense” to manage the money for their loved one.  Unfortunately, with the honor of being trusted comes the duty of fulfilling a difficult role.

As the Wall Street Journal pointed out, the trustee and the trust’s beneficiaries can frequently have disputes over issues affecting the trust.  At Ford + Bergner, we have represented countless trustees in these types of disputes, but we also represent trustees before any dispute arises with the hope that we can avoid the chance for a future dispute.  We recommend the following:

1.    The Trustee should regularly contact the Trust beneficiar(ies) to find out if there are issues that he needs to address.

2.    The Trustee should prepare an accounting every year and make copies of the accounting available to the Trust beneficiaries.  The accounting provides good information to the beneficiaries, and it puts them on notice to contact the trustee if they perceive that there are any problems.

3.    The Trustee should regularly meet (quarterly or semi-annually) with the financial advisors managing the trust’s assets to confirm that investment objectives are being achieved.

4.    The Trustee should employ a reputable estate and trust attorney to represent them through the entire length of their service as a trustee.  Although it seems like serving as trustee should just require “good sense,” it is a minefield of potential problems that need the expertise of a competent attorney.

Ford + Bergner represents trustees on a frequent basis.  If you find that you are the trustee of a trust, we would be glad to represent you in any current dispute with a beneficiary or in administering the trust correctly to avoid any future disputes.