There can be no worse job in the world of estate planning than being a Trustee. It may “sound good” to be in charge of a Trust, but most people have little idea of the duties, responsibilities and potential pitfalls they are undertaking when agreeing to be a Trustee.
What is a Trust Document?
First, there is the Trust document that imposes a long list of responsibilities. The Trustee must follow the Trust terms and take into account the various Trust provisions. Then there are the duties imposed by Trust law under the California Probate Code. Trustee duties under the Probate Code apply even if the Trust document is silent on the issue. For example, a Trustee must treat all the beneficiaries fairly. That is a duty that applies to all Trustees in California.
Responsibilities of the Trustee
One of the main responsibilities of the Trustee is to provide open and consistent communication regarding each beneficiary. Furthermore, there are all the people, assets, and situations a Trustee must properly manage, and communicating about these assets is easier said than executed. The beneficiaries must be kept reasonably informed, the Trust assets must be protected and managed well, and any unforeseen issues must be addressed. It is a full-time job in most cases.
Common Trustee Mistakes
Even where a Trustee tries to do the right thing, they may make mistakes. And when a Trustee makes a mistake, they may be personally liable for any damages incurred by the Trust. That can be a huge financial liability that the Trustee undertakes—all in the name of being “in charge.”
Types of People Managing Trusts:
There are quite a few corporate Trustee and professional Trustees out there that make it their job to manage Trusts. And in many cases, the professionals can do a better job of it than individuals because they have the right experience for managing a Trust. If you are asked to be a Trustee, and you don’t know all of the duties and responsibilities of a Trustee, then you are probably setting yourself up for failure.
Take it from those of us to make a living attacking bad Trustees. Being a Trustee is a thankless job. We can honestly say that no one should want to be a California Trustee.