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Living Trust – Five Basic Tips for Trustees

Basic Tips for your TrusteeIf you are putting together a living trust, naming someone as trustee of your trust is quite possibly one of the most difficult decisions you’ll ever make. The trustee is involved in just about every aspect of the administration of a trust; and although it is considered a great honor, it can also be a great responsibility.

But first, let’s be clear on what a living trust is.

What is a Living Trust?

A living trust, also known as a revocable living trust, is a legal document – often part of a comprehensive estate plan – that establishes a trust for any assets you wish to transfer into it. Most trusts are revocable at any time prior to your passing. Trusts are very efficient tools to distribute your assets and property after your death in a way that a Will cannot. Under the terms of the living trust, you are the grantor of the trust, and the person you designate to distribute the trust’s assets after your death is known as the trustee, or sometimes the successor trustee.

A trust allows you to:

  • Avoid probate (court hearings and public record).
  • Provide asset protection for the surviving spouse.
  • Avoid conservatorships for you and your minor children.
  • Protect your children from outright distributions at an age where they are not responsible to handle wealth.
  • Protect your child’s inheritance from creditors, bankruptcy, disinheritance (surviving spouse remarries), and divorce proceedings.

What are the Main Responsibilities of a Trustee?

The trustee you select has duty to protect the interests of the beneficiaries, follow the terms of the trust, comply with Arizona law, and satisfy the obligation of your estate. Most people choose someone close to them to serve as trustee: a best friend, son or daughter, brother or sister. Choosing someone who knows you and your family to serve in this role can be beneficial in many ways, but if that person doesn’t have a financial or legal background the responsibilities can be overwhelming!

It is important that the person you nominate as trustee knows not only what is expected of trustees in general, but also knows what you expect of them as a trustee. For this reason, you may want to consider giving your nominated trustee these Five Basic Tips for Trustees – and don’t forget to add your own personal requests as grantor.

Five Basic Tips for Trustees

1. Make sure you read and understand the entire trust document. If you don’t have a legal background it is okay to ask for help from an attorney – the team at Praesidium Law can offer assistance if you need it. Contact us.

2. Always remember that the beneficiaries of the trust are your first priority and responsibility. Once you are trustee you have what is called a “fiduciary duty” to always act in the best interests of the beneficiaries.

3. Make sure that the trust has its own separate checking account. If the trust is a living trust, you as trustee will likely be the person who creates that separate account after the death of the grantor. Under no circumstances should a trustee mingle personal finances with trust finances.

4. Maintain regular contact with the beneficiaries; not just to provide them with regular accountings of trust activity or investments, but also so you yourself can remain aware of the lifestyle, needs, and feelings of all the beneficiaries.

5. Be sure you have a support team that will benefit the trust and the beneficiaries. Get investment advice from a financial professional; have a trusted attorney help with any legal questions you might have; hire a mediator to help if there are irreconcilable differences amongst the beneficiaries. The goal here is not to spend the trust funds frivolously, but to protect and preserve trust assets as the grantors would have wished for their beneficiaries.

Request a Free Consultation with Praesidium Law

If these basic tips for trustees have been helpful, yet you feel the assistance of an attorney might be beneficial, let’s schedule a free consultation to discuss how we can help you. Please call 480.491.3216 or contact us online.

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