Advice for Non-Professional Trustees

Acting as a trustee for a trust created by a close friend or family can be complicated. A recent article discusses three common mistakes made by non-professional trustees that can be easily avoided.

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First, a non-professional trustee might not provide complete records and reports. Many states require trustees to maintain records of all income and distributions and provide a regular accounting to the beneficiaries of the trust. Sometimes, non-professional trustees do not have experience maintaining such records or creating financial reports. It is often beneficial to hire an accountant to assist the trustee with just these specific duties.

Second, a non-professional trustee who has close relationships with the beneficiaries might have trouble remaining neutral. For example, the trustee might have to decide whether to invest trust money in a nephew’s business venture, whether to sell the family home, or how much money to disburse to a beneficiary who is an estranged relative.

Third, a non-professional trustee might have trouble understanding their general role as a fiduciary.  The trustee is required to manage the trust for the benefit of the beneficiaries, not the person who created the trust. Similarly, the trustee is not allowed to use trust assets for personal benefit. This includes borrowing money from the trust assets, regardless of the ability to pay the money back.

Non-professional trustees should be cautious to avoid these three common mistakes and carefully follow the instructions in the terms of the trust. If you have questions or would like assistance with creating or managing a trust, feel free to call us at (626) 696-3145.

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