Planning for Life

8 Dos and 2 Don'ts for Serving as Trustee

Posted by Harry S. Margolis on July 2, 2019

By Harry S. Margolis

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Whether it's an honor or a burden (or both), if you've been appointed to serve as trustee of a trust, here are 10 dos and don'ts to follow to make sure you don't trip over any hurdles:

  1. Do read the trust document. It sets out the ground rules under which you will operate. So you need to understand them completely.
  2. Do set up a checking account for the trust. All income and expenses should go through this account. While you can and should invest the money, a checking account will enable you to make and track distributions and payments.
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Topics: trustee

Timing is Everything: Don’t Wait Too Long to Sue Your Brother

Posted by Lindsey Cavallaro on May 28, 2019

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In general, trustees have a duty of loyalty and care that must be upheld in the management of trust assets and funds. The trustee must only disburse and transfer funds for the benefit of the beneficiaries and for the purposes set out in the terms of the established trust. But what happens when these duties are breached, and the trustee starts transferring funds for their own benefit? For instance, maybe they transfer funds to their own personal bank account and purchase a timeshare in Mexico. This is precisely the alleged situation that divided a family in Whittaker et. al. v. Whittaker (United States District Court, D. Massachusetts, 2019) which they turned into a federal case.

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Topics: family dispute, trusts, trustee

7 Reasons to Use a Professional Trustee

Posted by Harry S. Margolis on April 9, 2019

By Harry S. Margolis

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Most people who create trusts for estate planning and asset protection purposes serve as their own trustees during life and then prefer family members to step in if they become incapacitated or to serve for trusts that continue after the grantor's death. Family member trustees keep things private and save money since professional trustees—whether a lawyer, a bank or a trust company—usually charge charge fees of 1.0% to 1.2% of the trust assets per year, often a higher percentage for smaller trusts—under $1 million—and a lower percentage for larger ones—over $2 million.

The use of a professional trustee also means a loss of control for family members and sometimes a loss of continuity when the trust officers for a larger bank or trust company change over time. In addition, if an individual attorney is serving as trustee, there's a risk of a loss of continuity or a gap if the trustee falls ill, passes away, or retires.

Benefits of Professional Trustees

So, with all of these downsides of using a professional trustee, what are the advantages? And how can you mitigate some of the potential drawbacks?

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Topics: trustee

What's a Trustee to Do Without Guidance? You Must Provide a Letter of Wishes

Posted by Harry S. Margolis on December 4, 2018

By Harry S. Margolis

trustee-management-grantor-letter-of-wishes-Wellesley-MA

So you've been appointed trustee. Now what do you do?

Of course, there are your administrative functions in terms of investments, bookkeeping, and paying taxes. But how do you decide how much to give each of the beneficiaries? When? For what purposes?

Some trusts are quite simple—you're directed to distribute the income, invest the principal and distribute what's left when the life beneficiaries pass away.

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Topics: trusts, trustee

Be Nice to Your Beneficiaries, or Don't Be Their Trustee

Posted by Harry S. Margolis on January 16, 2018

By Harry S. Margolis

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Dad created an estate plan that distributed three quarters of his estate to three of his children and the fourth quarter in trust for one of his daughters, Elaine, and her two children, Paul and Alicia. He named another daughter, Madeline, and her daughter, Paula, as trustees.

Dad died in 2001. The trust for Elaine and her children originally held $542,042. For the next 15 years, Madeline and Paula distributed nothing to Elaine or her children, until 2016 when a court ordered them to make distributions to Elaine so that she "could pay her medical bills and obtain housing." Madeline and Paula did, however, spend more than $50,000 paying for storage of personal items left to Elaine and paid themselves and their attorney.

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Topics: trusts, trustee

What Happens If Your Trustee Can't Serve?

Posted by Harry S. Margolis on November 14, 2017

By Harry S. Margolis

trustee-irrevocable-trust-successor-institutional-estate-planning-attorney-Wellesley-MA

So you've appointed your brother-in-law as the trustee for a trust for your children in case you die before they reach age 25. Or he and his wife have appointed you as trustee on a special needs trust for their daughter with Down's syndrome. Or, finally, your mother has her assets in a revocable trust. In any of these situations, what happens if the trustee becomes incapacitated?

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Topics: trustee

How to Avoid Problems as a Trustee - Massachusetts

Posted by Harry S. Margolis on November 12, 2012

By Harry S. Margolis

Trustee-Massachusetts-Wellesley-AttorneySo you've been appointed trustee.  Congratulations and beware!
 

While it's an honor that your relative or friend has enough faith in you to appoint you as a trustee, it's a big responsibility. If you don't perform your duties properly, the trust will not perform as designed, the beneficiaries may end up worse off, and you could be personally liable. Fortunately, you can avoid these potential bad outcomes by understanding your role and taking a few important steps.

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Topics: trusts, Estate Planning, trustee

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