Being a Trustee is Not Easy or Fun

ESTATE PLANNING

2 min read

When an individual creates a trust for estate planning, they have to name someone to be the trustee after they die. They usually pick a relative.

The trustee is in charge of following the instructions of the trust as far as distributing assets to beneficiaries. But before this can be done, the trustee has to create an inventory of all the assets and also pay any debts of the deceased.

It's A Lot of Work. Most People Are Not Prepared For It.

The beneficiaries have a legal right to know what the trustee is doing. There are required letters and financial reports that must be provided to all beneficiaries. Being the trustee is probably a thankless job. If you do everything right, no one will compliment you but many beneficiaries will be on the lookout for ways they are being shortchanged.

A trustee can get sued by the beneficiaries. A trustee is supposed to act in the best interest of the trust. They don't always. And quite often beneficiaries have suspicions that the trustee is taking money for themselves. Beneficiaries may hire an attorney to inquire further and take the matter to court.

This dynamic may be even more common where one sibling is the trustee and other siblings are the beneficiaries. Any personal issues will be magnified because now there's money involved. Plus there's the stress of the death of a family member that started this process.

A trustee can get paid. But usually, the trustee is related to the beneficiaries and they won't like these payments. This might cause them to ask more questions about what the trustee is doing.

A Trustee Can Get Help

A trustee can hire an attorney to help with the administration of the trust. The attorney can ensure proper records are kept and the correct reporting is sent to the beneficiaries. This prevents problems down the line. And the attorney can be paid out of the trust assets, not out of the trustee's own pocket.

It's a Strange Dynamic

The whole concept of a trust, with trustees and beneficiaries, and their rights and responsibilities, is confusing. It rarely makes sense to anyone the first time they get an explanation and sometimes never sinks in.

The main point to remember is that the trust was written with specific goals in mind. Usually, it's for providing for the family members of the deceased. The rules and requirements are to make sure that this occurs.