A trust is an estate planning tool that many property owners or others use. It is a fiduciary agreement that will dictate who the beneficiaries of certain assets and property will be. Trusts can be beneficial to ensure your family and loved ones are taken care of in the event that something happens to you and distribute your belongings as you wish. When dealing with a trust, a trustee will be appointed. It can be a big responsibility and trustees sometimes make mistakes when they find themselves underprepared for their role. For legal advice related to a trust obtain help from an experienced Hartford County probate attorney.
What is a Trustee?
The creator of the trust, referred to as the grantor, must appoint a trustee with its creation. A trustee is someone who holds the responsibility of handling the trust and ensuring that the desires of the grantor are respected. A trustee could be a trusted attorney, accountant, relative, or close friend. They will typically be someone that the grantor knows well and trusts to administer their wishes.
It is a big responsibility to be appointed as a trustee. Anyone 18 years of age or older who is mentally and financially stable is eligible to step into the role. Trustees must deal with taxes, asset distribution, charitable donations, and more. Because of the intensive responsibilities associated with the role, there is room for error.
What Mistakes Should I Avoid as a Trustee?
To ensure you are maintaining the wishes of the grantor and following all proper procedures, there are certain mistakes that you should try to avoid. The following are common mistakes that trustees can make.
- Misunderstanding their position: In some instances, grantors neglect to tell their appointed trustees about their role. Other times they simply forget or do not understand the scope of the responsibility. If you were appointed as a trustee you need to review the implications of that position and make sure you are following legal procedures.
- Being lazy: If you are not acting in a timely manner there could be consequences. You may not realize that you have a deadline to file certain taxes or documents or that you need to contact a distant family member. Inaction can result in penalties and fees that you may be responsible for if you neglect to perform your duties on time.
- Neglecting to communicate: You are the trustee but there are likely several beneficiaries that will receive assets from the trust. It is important that you keep open lines of communication with them. Avoid potential conflict by informing the beneficiaries of the next steps and timelines relevant to them.
- Breaching duties: Because of your role you have a duty to not only respect the grantor’s wishes but also to comply with certain laws and regulations. If you breach these duties in any way you could face serious consequences.
- Not keeping records: Keeping detailed and accurate records will be a necessary part of your role. You will have to review the details of the trust and take actions such as paying taxes and debts, making charitable donations, etc. Keep detailed reports of the actions you take and where money is being moved in order to avoid conflict and disputes.
