Planning for Life

You've Been Appointed Trustee, Watch Out! - Massachusetts

Posted by Harry S. Margolis on February 14, 2021

By Harry S. Margolis
 
appointed-trustee-duties-estate-planning-attorney-Wellesley-MA-02481
 
Being chosen to act as a trustee is a vote of confidence in your ability, but it is also a big responsibility. Trustees must locate and protect trust assets, invest assets prudently, distribute assets to beneficiaries, keep track of income and expenditures, and file taxes. If you don’t perform your duties properly, you can be held personally liable for any losses or extra costs. Read More

Topics: trustee

Can Trust Pay for Voodoo Cure?

Posted by Harry S. Margolis on January 24, 2021

By Harry S. Margolis

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Both the issues and the clients faced by trustees of special needs trusts can be significantly different from those faced by trustees of more traditional trusts created for asset management, tax, and asset protection purposes.

I am co-trustee of a trust holding funds derived from a medical malpractice award for a severely handicapped girl with cerebral palsy. She was born in the United States, but her parents came from the Dominican Republic.

Some years ago, the girl’s mother called me and asked whether the trust would pay for medications from Venezuela that had helped another girl with cerebral palsy. I was rather skeptical, but didn’t want simply to say “no.” So, I asked a number of questions about the name of the medication, its derivation, its dosage, and the amount of times the girl would have to take it. The mother said she would try to get answers to my questions.

A few minutes later, the mother called back to apologize for not being entirely straight with me. It turned out that she did not need the money for medicine, but for a voodoo cure. She was convinced that the reason her daughter had been born with her ailment was that while she was pregnant someone had put a curse on her, the mother. The voodoo doctor, for a fee, would remove the curse.

Being trained in a western tradition, I have no knowledge of these affairs. So I agreed to meet the mom halfway, to split the cost of the voodoo treatment. She paid for half out of her pocket; the trust paid for the other half. Unfortunately, the treatment didn’t work.

As this story indicates, trustees can be asked to pay for items or services that may run counter to their own values or best judgement. Should a trust pay for video games, plastic surgery, pornography, or an abortion? Guidance from the grantor of the trust can be helpful. But in the case of a special needs trust funded as the result of litigation, there really is no grantor. So, in that case, the trustee must make a judgement based on what she believes to be in the best interest of the beneficiary. That can include a consideration of the benefit the trustee believes the beneficiary will receive from the item or service. It should also consider the financial standing of the trust. Can the trust afford this payment, or would it deplete the resources available for services the beneficiary may need?

In the case of the voodoo treatment for my beneficiary, while I was almost 100% certain it would not work (always allowing for the possibility that my western view of how the world works could be wrong or limited), I felt there was value in strengthening my relationship with her mom. I do think that worked. My relationship with the family has grown as I've watched the mom continue to devote her life to caring for her largely bedridden and uncommunicative daughter. (It also helped when, years later, my co-trustee and I met the mom's sister and it turned out he and she knew people in common. Boston can be a small town in many ways.)

As a side note, if the voodoo treatment had worked, or if we truly believed that a voodoo curse was the cause of the initial injury, this would raise a serious doubt about the medical malpractice case which was the source of the trust funds. If the cause was voodoo, how can we find the doctor truly at fault?

 

Related Articles:

What You Need to Know about Special Needs Trusts and Taxes

SNT vs. ABLE Account: Which Makes More Sense for You

Congress Passes Special Needs Fairness Act

Read More

Topics: Special Needs Trust, trustee

8 Dos and 2 Don'ts for Serving as Trustee

Posted by Harry S. Margolis on July 2, 2019

By Harry S. Margolis

trustee-guidance-special-needs-trust-planning-attorney-Wellesley-MA

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

Professional-trustee-benefits-estate-planning-attorney-Wellesley-MA

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.

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Topics: trustee

What's a Trustee to Do Without Guidance? 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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