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Estate Planning Newsletter

  • When a Decedent's Killer is Also an Heir
    If a person murders a relative, is he/she entitled to receive any of the victim’s property? In most cases, the answer would be “no.” Usually, a convicted killer cannot inherit a victim’s property, even if he/she... Read more.
  • Remedy for Fraudulent Transfers of Property
    A constructive trust is a remedy imposed by a court when a person has wrongfully attained property in an inappropriate way. The court will undo the transaction and order that title to the property go to the rightful... Read more.
  • Estate Tax Rates in 2013
    Much to the relief of many, the American Taxpayer Relief Act of 2012 (“2012 Tax Act”) was enacted in the beginning of 2013, making permanent many of the tax benefits that were scheduled to expire at the end of 2012. The... Read more.
  • Avoid the Reciprocal Trust Doctrine When Creating Life Insurance Trusts
    Estate planning attorneys utilize a number of different estate planning techniques to accomplish the goals of their clients and sometimes to minimize transfer taxes. One common estate planning technique is the transfer of assets into an... Read more.
Estate Planning News Links

What are the Duties of a Trustee?

Every trust must have a trustee to properly administer the elements of the trust. Trustees can be individuals, financial institutions or even organizations.

A trustee follows the precise instructions of the trustor (or the trustor’s authorized representative), and also adheres to rules imposed by law.

Prudent Person Rule

Trustees are subject to the “prudent person” rule. This rule states that trustees should use the same standard of care and diligence that any sensible person would use in managing property. Additionally, a trustee should make a strong effort and utilize all of his/her skills in caring for the trustor’s property.

Responsibilities

A trustee has the duty to accomplish the following:

  • Administer internal affairs
  • Manage property
  • Invest property
  • Distribute income and principal
  • Deal with beneficiaries impartially
  • Use discretion over the important areas of the trust

Beneficiaries

A trustee has a fiduciary duty to the trust’s beneficiaries as well as to the trustor. In dealing with beneficiaries, a trustee should:

  • Use property only for the beneficiaries’ interest
  • Disclose important facts
  • Provide additional information related to the trust upon request of the beneficiaries

Improper Activity

A trustee should not:

  • Use trust property for personal benefit or purposes not related to the trust
  • Acquire interests in conflict with those of the beneficiary
  • Sell property to himself/herself
  • Delegate his/her duties to another individual

If a trustee is suspected of improper activity or misuse of his/her discretionary decision-making powers, the court will review the trustee’s actions after a petition is filed by the trustor or any beneficiary. A trustee may also petition the court for a review if beneficiaries question his/her decisions.

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