You’ve been nominated as Trustee…. Now what?

Being appointed as a trustee for a family member's trust is a significant responsibility. As a trustee, you have been entrusted with managing the assets in the trust for the benefit of the trust beneficiaries- that is, other people who will inherit from the trust. It is a role that requires a high degree of diligence, transparency, and accountability. In this blog post, we'll provide some tips for people acting as trustees for a family member's trust.

1.    Understand your responsibilities: As a trustee, you have a fiduciary duty to act in the best interest of the beneficiaries of the trust. This means that you must manage the assets in the trust prudently, make decisions in good faith, and avoid conflicts of interest. It is essential to read and understand the terms of the trust and any legal documents associated with it. If you are unsure about your responsibilities, seek the advice of an attorney or financial advisor.

2.    Keep accurate records: As a trustee, you must keep accurate records of all transactions related to the trust. This includes all income, expenses, distributions, and investments. Maintaining good records is essential for demonstrating transparency and accountability to the beneficiaries and protecting yourself against any potential legal challenges- in other words, protect yourself in case you get sued.

3.    Communicate with the beneficiaries: Communication with the beneficiaries is critical in building trust and maintaining transparency. Keep the beneficiaries informed about the performance of the trust, any changes to the trust's assets or investments, and any decisions you make as a trustee. Regular updates and communication can prevent misunderstandings and disputes in the future.

4.    Seek professional advice when necessary: As a trustee, you may need to make decisions that require expertise in areas such as tax, finance, or legal matters. In such cases, it is essential to seek advice from professionals with expertise in these areas. Consulting with professionals can help you make informed decisions and avoid costly mistakes.

5.    Act impartially and avoid conflicts of interest: As a trustee, you must act impartially and avoid conflicts of interest. Avoid using the trust assets for personal gain or making decisions that benefit you or your family members at the expense of the beneficiaries. If you are unsure about a potential conflict of interest, seek the advice of an attorney or financial advisor. This is the most common reason for lawsuits against trustees.

In conclusion, acting as a trustee for a family member's trust is a significant responsibility. It requires diligence, transparency, and accountability. By understanding your responsibilities, keeping accurate records, communicating with beneficiaries, seeking professional advice when necessary, and avoiding conflicts of interest, you can fulfill your duties as a trustee and protect the interests of the beneficiaries.