Trust Administration Tips

This is an article from Morris Hall, PLLC (https://morristrust.com/.)in Phoenix, Arizona, that we thought others may find helpful.

Although a Last Will and Testament remains the most common estate planning tool, trusts have steadily increased in popularity over the last several decades.  It is now very common to find a trust in the average estate plan. There are numerous types of trusts that help achieve a wide variety of estate planning goals. One thing that all trusts have in common, however, is the need to appoint a trustee to administer the trust.

A trustee is responsible for the proper management and administration of the trust assets.  If you find yourself as the trustee of a trust for the first time, then you likely feel a bit overwhelmed. The best way to ensure that you do not make a costly mistake in your role as trustee is to retain the services of an experienced trust administration attorney.  You may also find the following trust administration tips helpful:

  • Don’t try to go it alone. The duties and responsibilities of a trustee typically require at least a rudimentary knowledge of both legal and financial concepts. In a worst-case scenario, you could be held personally liable for any mistakes or errors you make as the trustee. If you are unsure of yourself, it is important to seek professional guidance before making important decisions involving trust assets.
  • Make sure you have a clear understanding of the trust terms.The trust terms reflect the trustor’s intent and guide the administration of the trust.  Therefore, read the trust agreement until those terms are clear to you. Again, if you have any doubts, consult an experienced trust attorney for guidance.
  • Document everything. One of your duties as trustee is to keep excellent records of all trust business. Another is to maintain communication with the beneficiaries of the trust and provide updates on trust business. Thus, the better the record keeping and communication, the less likely a claim of breach of fiduciary duty will arise.
  • Be vigilant about avoiding conflicts of interest.  A trustee has a duty of impartiality. It is easy for the appearance of a conflict of interest to arise that could threaten a proper trust administration, especially if the trustee is close to a trust beneficiary. Always be aware of potential conflicts of interest and do everything possible to avoid those from occurring.
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