Being a trustee for an estate is one of the biggest responsibilities many people will take on in their lives. Not only are you responsible for seeing that a loved one’s wishes are carried out, you may also be responsible for other people’s finances in the short term if you are the trustee. Although you may have been named as the trustee of an estate or trust, that doesn’t mean that you are automatically prepared for what it might take to manage it, and a little education and guidance goes a long way to making better choices. Here we look at 5 common mistakes new trustees make, and how you can avoid them.
Not Hiring A Lawyer To Help
Trust documents can be notoriously difficult to understand, and trust administration can be technical and full of hidden details you may not pick up on without legal training. Recruiting the assistance of an experienced estate attorney can really make all the difference when you’re dealing with issues like taxes, interpretation of the documents, creating sub trusts, and dividing assets between current distributions and future expenses.
An attorney can provide detailed and skillful assistance in what is actually, for many people, a difficult time. It’s also great to have a lawyer on hand to quickly dissipate conflicts before they arise and ease trustee disputes or trustee problems to prevent costly litigation.
Not Following The Terms of The Trust Documents
As mentioned above, trust documents can be difficult to navigate and understand. However, if a trustee fails to interpret and follow the terms of the trust documents meticulously, they can become liable for costs and damages incurred to other parties, as well as being removed from the position of trustee.
Not Treating Beneficiaries Fairly
A trustee needs to act impartially and fairly to all parties involved in the trust, no matter what emotions might also be involved. A trustee always needs to be fair and equal in dividing the property, as well as ensuring they receive adequate and clearly recorded compensation for their work. A failure to be fair and impartial could result in removal of the trustee, or even further legal action.
Not Keeping Good Trustee Records
Failing to keep good records of work done as a trustee is another area where inexperienced trustees often slip up. Administering a trust requires a great deal of paperwork and you want to ensure every action or distribution is well recorded to keep everything above ground and avoid disputes.
Not Knowing When To Go To Court
Sometimes trusts are the basis of trust disputes or ambiguous terms that cannot and should not be settled out of court. Working with an estate lawyer who is also a litigation attorney from the beginning can really help to make sure you stay on top of the legalities and that the interpretation of the trust document is as clear as possible from the very beginning, while also being your support if you need to go to court.
While becoming a trustee can be both a challenging task as well as an honor, avoiding these 5 common trustee mistakes can help the process become easier, smoother and more favorable for all parties involved.