Your Trust Fiduciary/Trustee—-Friend or Foe??
With the financial conflicts facing individuals and families today and the aging of the general population, more trust beneficiaries and family members are becoming concerned with the fiduciary duties of the trustees of their individual trusts.
The fiduciary duty is a legal relationship, obligation and trust to act in the best interest of the beneficiary. The fiduciary or trustee, must employ undivided loyalty to the beneficiaries concerning all matters related to their trust and will be held accountable if he or she acts adverse or contrary to the interest of this relationship.
The duties of a Trustee Fiduciary include the following:
- The Trustee must be loyal to and administer the trust solely for the benefit of the beneficiaries. The trustee can never take advantage of his or her position for personal gain.
- The Trustee must deal impartially with all beneficiaries, if more than one exists. This can sometimes be difficult, since each beneficiary may have their own agenda and needs to be met.
- The Trustee must obtain possession of the trust assets immediately and keep these assets under his or her control through the entire term of the trust. The Trustee must also enforce claims and defend actions against the assets in the trust.
- The Trustee must keep the trust assets separate and segregated from his or her own personal assets and from assets or funds of any other trust instrument unless the trust itself provides otherwise.
- The Trustee must administer the trust personally and responsibly at all times and only delegate responsibilities that would be in the best interest of the trust, such as a tax advisor or accountant.
- The Trustee must keep the assets productive to pay income to the beneficiaries. The duty of the trustee is to keep trust property invested so it produces income.
- The Trustee must make full disclosures and furnish information to the beneficiaries about the administration and status of the trust. An annual report is standard with an accounting of income, expenses, gains, and losses. Upon request, the Trustee must provide for the beneficiary, complete and accurate information on the nature and amount of the trust property and permit the beneficiary to inspect the accounts and other documents related to the trust.
A Trustee must be honest, responsible, have a high degree of integrity, and a genuine interest in the welfare of the trust and the beneficiaries. It is also very important that the Fiduciary has experience in the investment of assets and management of property to keep the trust income producing.
There can never be a conflict of interest between a Trustee and the beneficiary. The law forbids a Trustee from acting in an adverse manner contrary to the interest of the beneficiary or from acting in his own benefit in relation to the trust.
The Nacol Law Firm PC
Law office of Attorney Mark Nacol
Serving clients in the Dallas – Fort Worth Metroplex area for over 30 years