A trust allows you to provide for others, and all trusts are managed by an individual known as a trustee. It is important to select an appropriate and responsible trustee to ensure your intent is carried out and that your loved ones and other beneficiaries are cared for. Here are some important things to keep in mind when you select a trustee.
What Powers Does a Trustee Have?
A trustee has the power to make sure your trust is effected as you intend. These powers include revoking, withdrawing, or modifying the trust. A trustee also has the implied power to contract, sell, lease, or transfer the trust property. However, their powers are not absolute. A trustee has the duty to act as a “reasonably prudent person” in managing the trust, which means they are bound by certain duties to the trust and its beneficiaries.
Duty of Loyalty and Good Faith
A trustee must act according to the duty of loyalty and good faith. In layman’s terms, this means that the trustee has the duty to administer the trust in good faith and act reasonably when they invest property. Trustees must manage the trust solely for the best interests of the beneficiaries. Trustees cannot “self-deal,” such as buying or borrowing trust assets.
Duty of Prudence
Trustees can delegate some of their responsibilities, but not all. If it would be unreasonable to expect a trustee to perform a task, then a trustee may delegate it. For example: if a trust contains stock and the designated trustee has no experience with
What Happens if a Trustee Violates These Duties?
A trustee can be held liable to the trust and its beneficiaries in several ways. Trust beneficiaries can sue them to recover losses resulting from a trustee’s breach of trust, or even to force them out of managing the trust. Additionally, if a trustee enters into contracts on behalf of the trust, they can be held liable for those contracts.
Who Should I Designate as My Trustee?
Your trustee should be someone with integrity who will act not only in your best
Questions About Setting Up a Trust?
A trust can be your legacy to your loved ones or the community, and it’s important it be both