For many people, a trust is an integral part of their estate plan. An essential part of creating a trust is appointing the right Trustee. The Trustee is responsible for ensuring that the purpose of the trust and its terms are carried out. The Trustee is also responsible for ensuring that the trust assets are managed appropriately. Here are five things you should know about appointing a Trustee:
- Trustees are legally responsible to the trust’s beneficiaries
- The ultimate responsibility of a Trustee is to preserve the assets for the trust beneficiaries. This means that the Trustee is responsible for ensuring that all property within the trust is preserved and/or invested, and distributed according to the terms outlined in the trust document.
- Trustees have a great deal of power
- As a general rule, Trustees have an extraordinary amount of power over the assets in a trust. While they have a legal duty to ensure that the assets are appropriately managed, they have significant discretion on what it means to manage those assets. This authority could potentially lead to theft, embezzlement, or mismanagement.
- Trustees can be held responsible if they abuse their authority
- When a Trustee chooses to abuse their authority by enriching themselves at the expense of the beneficiaries, or otherwise mismanage the trust, they can be held legally accountable. Beneficiaries have (1) the right to sue a Trustee that has breached their fiduciary duty, (2) may be entitled to receive monetary damages for mismanaging assets and (3) can have a Trustee removed from their position as Trustee for mismanagement or for breach of their fiduciary duties. In some cases, mismanagement or abuse of their duties could lead to criminal prosecution against the Trustee.
- Trustees can refuse their position
- While Trustees are legally obligated to serve the interests of the trust’s beneficiaries, they are not legally obligated to take the position. Being a Trustee is, after all, time-consuming and difficult, and not everyone will be able or willing to handle the task. If you find yourself without a Trustee, the court may appoint one on your behalf, but you may not like who they pick.
- You can appoint backup Trustees
- Fortunately, you can also choose to appoint backup/successor individual or a company to become a Trustee if your first choice does not work out or is otherwise unable to serve. However, like any other decision about your estate plan, you should speak about your trust with an estate law attorney. An estate attorney can assist you in determining what may work best for you, and help you to create an estate plan that suits your personal needs.
Whether for yourself or for a loved one, estate and elder law planning can be overwhelming and emotionally taxing. The legal professionals at Hobson-Williams, P.C. will advise you on the options available to you, and help you establish a plan that best suits your needs. Call (718) 210-4744 or visit our contact page to speak to one of our attorneys and learn how Hobson-Williams, P.C. can help you gain the peace of mind that comes from being prepared for the future.