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    Estate & Probate » Blog » Mistakes Frequently Made in Trust Administration

    Mistakes Frequently Made in Trust Administration

    Creating a trust helps people achieve various important goals. Trusts help to manage assets and property as well as make sure that assets are appropriately distributed after a person’s death. Trusts can also protect from creditors and others who are interested in collecting on debts. Despite these advantages, however, administering a trust appropriately is not easy. There are several mistakes that people commonly make while handling trusts.

    Not Understanding What is Required as a Trustee

    Sometimes, trustees are appointed without being certain about what their responsibilities are. Other times, ambiguous language in the terms of the trust leaves a trustee uncertain what the trust’s creator wanted. Because trustees are personally liable for mismanagement of trusts, it is a good idea for trustees to carefully identify what duties are requested and whether any potential conflicts need to be resolved first.

    Mismanagement of Trust Assets

    Trustees have a duty to act in the best interest of the trust beneficiaries and must also conform to federal laws and regulations. These regulations permit beneficiaries to pursue payment from trustees for any investment decisions that lead to financial losses. Trustees, however, can protect themselves by delegating investment duties to a professional investor.

    Not Remaining Neutral

    Trustees have a duty to serve the individual who created the trust and then beneficiaries. Maintaining this duty can require diplomacy, even if beneficiaries do not agree with one another. Trust creators can include language in the trust to help your trustee make difficult decisions. If a trust creator is uncertain about whether a trustee can remain objective, it is a good idea to consider naming a corporate trustee with no emotional connection to either the trust creator or beneficiaries.

    Not Maintaining Accurate Records

    A trustee has various financial responsibilities, which include paying trust funds and arranging for tax returns for the trust. If a beneficiary alleges trust mismanagement, the trustee will be required to provide an accurate and complete assessment for all transactions involving the trust. Trustees should maintain detailed records about every decision made for a trust property as well as provide accompanying documentation in the case of disputes.

    Not Considering Compensation

    Performing as a trustee can be a demanding job at times. As a result, trustees are entitled to receive compensation for their services. Unfortunately, however, beneficiaries and trustees sometimes disagree about what the proper amount of payment should be. Unfortunately, disagreements are common when trustees perform the task for several years without receiving compensation. One of the best ways to avoid disputes over compensation is to place a clause addressing fee payments to the trustee in the terms of the contract at the outset.

    Speak with an Experienced Estate Planning Attorney

    If you or a loved one is interested in creating a trust, it can help to speak with a knowledgeable estate planning lawyer. Contact attorney Jim A Lyon today to discuss your estate planning goals.

    Ethan Moran
    Ethan Moran
    09:36 28 Dec 22
    To my wife and I, our probate case was complicated. Not to Jim! He made it look so easy, and his attention to detail is incredible. Highly recommend to anyone seeking an estate planning lawyer.
    Philippe Joshua
    Philippe Joshua
    17:56 30 Nov 22
    Jim's firm was referred to me by a friend who knew I was looking for an estate planning lawyer. I can't say enough good stuff about him. He's genuine, thorough and highly skilled. Strongly recommend.
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    Estate & Probate » Blog » Mistakes Frequently Made in Trust Administration