Trust Administration

As a general definition, a trustee is a person or group of people who have been given property for safe keeping, for investment, and for the inevitable distribution to other people, known as beneficiaries. As a trustee, you are a fiduciary, which requires you to behave with the highest degree of loyalty and integrity towards the property being held and to the person for whom it is held.

In contemplating this often daunting responsibility, you will likely have the following questions to which you will need answers:

• I have just discovered that I have been named the trustee of a trust. What should I do first?
• What are my duties as trustee?
• Am I entitled to compensation as a trustee?
• How can I limit my liability when acting as a trustee?
• Who are the beneficiaries?
• Now that I know who the beneficiaries are, what information do I have to provide?
• Am I required to file estate and income tax returns for the trust?

Accepting the job as trustee is a huge legal and financial responsibility (and often a thankless one).  Make sure you are a detail-oriented person, up to the task, and rely on the advice of your attorney, accountant and financial adviser. How complex can this whole process be?  In some circumstances, this process can take decades and require a trustee to make some very tough choices.  Here are some scenarios in which a trustee must make hard decisions:

Scenario 1: Your elderly father and mother from out of state come to visit you in Oregon.  While they are here, your father gets sick and passes away.  Your mother, who is also elderly, makes you the trustee of their trust.  Do you understand the responsibilities to her and to your siblings and other family members?

Scenario 2: Your sister has been living with your elderly mother and you suspect that she has been stealing money from her and other signs of possible elder abuse.  As trustee, your fiduciary responsibilities to your mother and her beneficiaries requires you to take action.  Do you know what you should do?

Scenario 3: Your adult-aged son suffers from several mental and/or physical disabilities and can not sustain a full-time job.  He has trouble understanding finances and you are worried that he will not be able to maintain his inheritance on his own when you and your spouse are gone.  Who should take on the task of administering your trust so he can be provided for?

Scenario 4: You and your siblings do not get along very well and you are the trustee (and a beneficiary) of your parent’s trust.  Although almost every family is dysfunctional, do you know the extent of what you must communicate and do to administer your parents’ wishes, even if your relationship with your siblings is strained?

Scenario 5: Your husband recently died of cancer, and he handled all of the finances for the two of you.  You are the trustee of his trust and his kids (from a prior marriage) are accusing you of trying to cut them out of their share of the estate.  What are your options?