Previously I wrote about the problems when parents name one of their children as trustee of the family trust. This month, we deal with some tips if you are one of the children who has been named as the trustee.
1. Know the Trust. As trustee, your responsibility and duties flow from the wording of the trust. Like Scripture, if you fail to do something you have a duty to do, you have sinned. And if you do something that you don’t have authority to do, you have sinned. Make sure that you know what your duties are, and if you don’t know, ask an attorney who is familiar with trusts to explain them to you. And get that advice in writing.
2. And Very Important:
Sometimes Mother and Father told you what their desires are when they were alive, but their desires don’t match up with the wording of the trust. Go over the trust with your parents while they are alive and, if necessary, have them make changes to assure that what they want is in the wording of the trust because you will be bound by the wording of the trust.
3. Know the Law. Ohio recently adopted a series of laws known as the Uniform Trust Code. These laws may impose duties and restrictions upon you as trustee that is not contained in the trust. Once again, an attorney who is familiar with trusts can give you good advice as to how these laws affect your job as a trustee.
4. Assemble a Team of Advisors. It is good to assemble a team of advisors to help you with your job as trustee. Attorneys can give you legal advice on your duties. Accountants can help you with tax planning. Financial planners can help you with advice about investments.
5. Be Transparent. Trustees are responsible the people who will receive the proceeds of the trust when it is concluded. Most problems arise when the beneficiaries don’t know what the trustee is doing. Regular accountings are the key to transparency and keeping beneficiaries satisfied with the job you are doing.
6. To Sum Everything Up: If you are the trustee of a family trust, live by the words of Benjamin Franklin: “An ounce of prevention is worth a pound of cure!”
Thomas D. White, Senior Partner, White Law Office, Co.