WHAT IS A TRUSTEE?
A trustee is a person or a licensed corporation that owes a special duty of care to the beneficiaries of a trust.
WHAT IS A COTRUSTEE?
WHAT IS A SUCCESSOR TRUSTEE?
WHAT IS A TRUST PROTECTOR?
A trust protector is a person or corporation that, depending on the terms of the trust, has authority to oversee the trustees, to change provisions of the trust, to veto acts of the trustees, and, in general, to ensure that the trust is being properly administered.
WHAT DOES THE TERM “FIDUCIARY” MEAN?
The word “fiduciary” comes from Roman law and is derived from the same word as are “fidelity” and “faith.” A person who is a fiduciary has been put in a position requiring him or her to be faithful and trustworthy. A trustee is the ideal example of a fiduciary. When a trustee controls trust assets, he or she must be faithful to the beneficiaries by performing the trustee’s duties in their best interests, and in accordance with fiduciary law, as he or she carries out the terms of the trust agreement.
WHAT IS THE PRIMARY FUNCTION OF MY TRUSTEES?
CAN THE SUCCESSOR TRUSTEE THAT I APPOINT IN MY REVOCABLE LIVING TRUST CONTROL HOW MY ASSETS WILL BE DISTRIBUTED?
Your revocable living trust should contain very specific instructions as to how your trust assets will be distributed. Your trustee is merely an agent whom you appoint and who has the duty to carry out your instructions. In law, the agent is knows as a fiduciary. In essence, a fiduciary is a person who is entrusted with the assets of another and who is obligated to carry out the direction set forth by the person entrusting those assets. Fiduciaries cannot derive personal benefit from assets entrusted to them. Therefore, the instructions set forth in your revocable living trust must be followed by your trustee and cannot be changed by your trustee. Any deviation from your instructions will subject your trustee to personal legal liability.
DOES MY TRUSTEE HAVE TO FILE AN ACCOUNTING FROM TIME TO TIME WITH MY BENEFICIARIES?
CAN THE TRUSTEE, ACTING IN HIS OR HER CAPACITY AS TRUSTEE, AMEND MY TRUST?
In general, no. Under ordinary circumstances, your trustee cannot amend the trust but must work with what he or she has. Under extraordinary circumstances, it might be necessary for the trustee to bring an action in the appropriate court asking to reform the trust in some pertinent aspect to correct an obvious oversight or omission which would defeat the intent of the trust maker.
CAN YOU SUMMARIZE THE GENERAL DUTIES OF TRUSTEES?
Preparing a complete inventory and valuation of the trust assets
Obtaining a federal tax number from the IRS
Paying applicable expenses (medical, funeral, etc.) and taxes (federal estate tax, if applicable, and inheritance tax)
Dividing and allocating assets to the subtrusts created in the trust if required by the terms of the trust
Distributing assets according to the directions of the trust
Preparing accountings as may be required
CAN MY TRUSTEE DELEGATE SOME OF HIS OR HER DUTIES TO OTHERS OR APPOINT A TEMPORARY OR SUBSTITUTE TRUSTEE?
Your trustee can do these things if the trust agreement authorized them.
DO MY TRUSTEES PUT MY TRUST PROPERTY IN THEIR INDIVIDUAL NAMES?
CAN MY TRUSTEES APPROPRIATE MY PROPERTY FOR THEIR OWN USE IF THEY ARE NOT BENEFICIARIES OF MY TRUST?
Trustees are charged with the highest duty and responsibility imposed by law in carrying out their functions. They are absolutely prohibited under the law from using trust assets or income for their personal use, enjoyment, or benefit.
HOW DOES THE LAW MEASURE THE PERFORMANCE OF TRUSTEES?
WHO LOOKS OVER THE TRUSTEE’S SHOULDER?
WHAT IF MY TRUSTEES MAKE MISTAKES AND LOSE MY FUNDS?
If they make mistakes which are proved to be costly to the trust or its beneficiaries, trustees are liable to the beneficiaries for those mistakes. However, whether or not the funds are collectible is another matter.
HOW CAN I PROTECT MY BENEFICIARIES FROM THE MISTAKES OF A TRUSTEE?
Name a corporate fiduciary as a cotrustee. By law, corporate fiduciaries are liable for their mistakes and, as such, can be collected against. They must post all of their assets as their bond for the faithful performance of their duties.