When it comes to estate planning, trust administration is a critical component. Included in that is the trustee’s role in administering the trust. The trustee is the person who has been chosen to be responsible for complete management of the trust property and other important duties. With Charlotte trust administration, here are several really important facts that a trustee must know to properly fulfill his or her duties.
Recognize that Charlotte trust administration can be complicated
Many people do not realize that trust administration is not as simple as handling a will through probate. One important distinction that must be understood is the different approach needed to handle trust income and trust principal. The majority of trusts include provisions that deal with these two components separately. For example, the trust may instruct the trustee to transfer the principal to one set of beneficiaries and then transfer the income derived from the trust property to another set of beneficiaries. It is really crucial that you understand this aspect of Charlotte trust administration so you won’t make mistakes.
The trustee must be a fiduciary at all times
Trustees are expected to manage trust property only in a manner that will serve the best interests of the trust beneficiaries. Being a fiduciary means being someone trustworthy and honest in every way when administering the trust. Charlotte trust administration is essentially a legal obligation. Consequently, if you violate your fiduciary duties you may be held personally responsible. For this reason, a trustee must understand the scope of their duties before engaging in any activity that could violate the provisions of the trust or the applicable laws.
If you need professional help, ask for it
Considering the nature of the legal responsibility a trustee has, there may be times when the trustee needs assistance from a professional with regard to Charlotte trust administration and the trustee’s duties. This is especially true when the trustee is not experienced with handling investments. In fact, mismanagement of investments of trust property is one of the issues most often litigated. So, if you need help, don’t be afraid to ask for it.
A trustee must remain neutral in all transactions
Part of Charlotte trust administration, as a fiduciary, the trustee is required to maintain neutrality in all transactions. That means the trustee is expected to always look beyond their own interests and be fair to all beneficiaries. A trustee must comply with the provisions of the trust document. That is not always as simple as it may seem, particularly if the trustee has any type of relationship with the trust beneficiaries or the family involved.
A trustee is expected to provide a complete accounting of your activities
Trustees are also responsible for maintaining an accurate and complete accounting of every transaction that involves the trust property. In addition to mishandling investments, improper record keeping is a frequently litigated issue in Charlotte trust administration. Therefore, it is a necessity that you keep a record of every decision made that pertains to the trust property, especially distributions. If you follow this rule, as a trustee you can defend all of your decisions and hopefully avoid being held personally liable.
Trustees should address the issue of fees early on
Typically, trustees are permitted to request a fee for their services. In many states, trustee fees are governed by statute and what is reasonable can vary. Corporate trustees often provide trust administration services on a set fee schedule.
Even though trustees can receive compensation, most trustees do not actually request a fee. The reason is usually that the trustee has a relationship with the person who made the trust or the family and beneficiaries. However, once they have served as a trustee for several years without any compensation, having spent a significant amount of time performing their duties, people usually start to think about fees.
If this issue of fees has not been discussed ahead of time, then the trustee may have to deal with beneficiaries challenging the request. But, if you do not discuss your fees up front, it is likely that a court will need to intervene and make the decision about what your fair compensation should be.
Join us for a FREE seminar today! If you have questions regarding trust administration or any other estate planning matters, please contact the experienced attorneys at the Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC), (606) 324-5516 (Ashland, KY), or (859-372-6655 (Florence, KY). We are here to help!
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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