When someone creates a trust, that person must choose someone else to manage the trust property when the trust creator becomes unwilling or unable to manage the trust themselves. This person is known as the trustee or successor trustee. Though there are professional trust management options, many people select a nonprofessional trustee, such as a trusted friend or family member. If you’ve been placed in the position where someone is asking you to serve as a trustee, you will want to give the opportunity careful thought before you accept or decline. A trustee can face serious consequences if he or she acts improperly in the management of the trust. Here are three potential pitfalls you will want to consider before accepting the position of the trustee.
Your ability to manage finances.
Many trusts require trustees to manage money by investing it. If you aren’t an experienced or professional investor and are responsible for a substantial sum of money, you will always want to invest the money only after you have received financial advice from a financial professional.
Your ability to do the job.
Your job as a trustee may require you to spend a lot of time managing property, working with beneficiaries, or performing a wide range of tasks associated with managing the trust. If you don’t have enough time to devote to the task, you can run into problems by failing to meet your duties as a trustee.
Not knowing what to do.
Managing a trust isn’t always difficult, but there are specific duties you must meet. You need to have competent legal advice so you can be sure you meet your legal obligations, understand the legal terms of the trust, and understand any conditions the trust imposes on you before you can distribute property to the beneficiaries.
Being named as a trustee is both an honor and a responsibility. In order to perform your duties correctly, you should work with a qualified attorney with substantial experience in in the administration of trusts.