Trustee Of A Trust
Trustee, Irrevocable Trusts and Fiduciary Relationship to Beneficiaries
About the Trustee of a Trust. What is the accountability of a Trustee and how the Trustee relates to the Irrevocable Trust? What are the Fiduciary Relationship of the Trustee? What’s a Trust Protector?
Trustee Of A Trust
The Trustee is the guy who manages your Trust assets. Great care should be taken in your selection of your Trustee. The Trustee is bound by the Trust document (contract) and he has a duty to protect Trust assets for the Beneficiaries. The independent Trustee manages the Irrevocable Trust that hold legal title to Trust assets and exercises independent control.
The Trustee can be your lawyer (worst person you would ever want to trust), your accountant, best friend, or anyone you trust who’s not a relative by blood or marriage. You may have more than one Trustee, but I do not recommend it. I usually recommend a Trustee and a Trust Protector in all cases of $500,000 or more.
Accountability of Trustee
Trustee Of An Irrevocable Trust
- Complete asset protection
- Elimination of probate
- Elimination of estate or inheritance taxes
- In certain cases a tax deduction for the assets contributed to the Trust
- And finally, under certain conditions other uncommon tax benefits not otherwise available
Examples of Irrevocable Trusts:
- Ultra TrustÂ®
- Medallion TrustÂ®
- Vertex TrustÂ®
- Charitable Remainder Trust
- Charitable Lead Trust
Duty Of Trustee Is To Obey Trust Document For Benefit Of Beneficiaries
Fiduciary Relationship Of Trustee
- No private advantage – A Trustee is not permitted to use or deal with Trust property for private direct or indirect advantage. If necessary the court will hold him personally liable to account for any profits made in breach of this obligation.
- Best interests of Beneficiaries – Trustees must exercise all their powers in the best interests of the Beneficiaries of the trust.
- Act prudently – Whether or not a Trustee is remunerated he must act prudently in the management of Trust property and will be liable for breach of Trust if, by failing to exercise proper care, the Trust fund suffers loss.
In the case of a professional, the standard of care which the law imposes is higher. Failure to exercise the requisite level of care will constitute a breach of Trust for which the Trustee will be liable to compensate the Beneficiaries. This duty can extend to supervising the activities of a company in which the Trustees hold a controlling interest.
Grammar notations: please note that I have capitalized words such as Grantor, Revocable Living Trust, Trust, Beneficiary, Trustee for easier reading and emphasis on these words. Grammatically, they should be in lower case.