Congratulations! You Are NOW A Trustee!
When someone approaches you to act as a trustee, usually it is a parent, a son or daughter, a trusted friend, a spouse or some other family member. It is very common for the trustee to have very little idea what the responsibility means. Yet, being a trustee is a very important duty and because it is so important, it is vital that trustees fully understand the duties involved.
Why?
Being a trustee means you have agreed to the duty of carrying out your responsibilities on the behalf of the beneficiaries. If something goes wrong and the job is incorrectly executed or haphazardly done, YOU are personally liable to make the beneficiaries whole. The person who asked you to be a trustee put their faith in you to manage and distribute their property as stated in their trust—NOT to benefit you.
As trustee, the first obligation is be loyal to the beneficiaries. Naturally, you cannot do anything that is not in the best interests of the beneficiaries.
Here Are Some Absolutes Regarding Loyalty When It Comes To Acting As A Trustee:
- You may NOT purchase trust property.
Unless the trust says otherwise, you may not purchase trust property. It doesn’t matter if you pay a fair price or even if the purchase is via a public auction. Just don’t do it. In rare circumstances and with a lot of legal documentation, an attorney can help you overcome this hurdle.
- You may not sell your own individual assets to the trust.
If the trust needs to acquire some property (stock, mutual funds, real estate, a car), the trustee cannot sell his or her own property to the trust. This is considered an act of self-dealing and can get the trustee in trouble!
As with anything important, understanding your role is key to performing it well. If you are asked to be a trustee, be sure to ask questions and seek clarification for any confusion. You may ask to meet with a lawyer if you feel unsure of your trustee role duties.
