Guzman Law Group


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Posts tagged Trustee
You May Not Always Be Your Own Trustee

The focus for many people when they create a Trust is the distribution of their assets at the time of their death. We are seeing more clients who are living past their ability to direct and maintain their own finances. Make sure your Estate Planning documents are clear as to what you want for yourself in the event that a Conservator is appointed for you or in the event your Successor Trustee takes control of your finances during your lifetime.  What care and level of living do you want? Do you want to remain in your home for as long as possible despite the cost of home healthcare? Do you want annual gifts that you make to continue during your lifetime? Remember your Agent for Power of Attorney does not have authority or control over your Trust assets. If a Lease needs to be renewed or a Certificate of Deposit needs to be renewed and the assets are in the Trust name it will take the power of your successor Trustee to direct those assets.


Estate Planning for Young Families: Protecting Your Assets and Passing on Your Values

Preparing your estate plan can feel like a daunting task, but once your estate plan is completed, it is a comfort to know that just in case something happens to you, your family is protected. Many young families preparing an estate plan are focused on the distribution of assets to their children and who will be handling it. What young families also need to consider is what important family values they would want passed on to their children. Appointing a guardian is the first step. Choosing someone who shares your core values and life priorities ensures that your values will be implemented. Many times the guardian of your children will not be the same person best suited to handle your children’s finances. This financially responsible person is known as a trustee. If your children’s guardian and trustee are not one in the same, you should make sure your plan appoints a trustee who will work well with your guardian and who is aware of your child’s needs. Your estate plan should document your core values and goals for your children so that both your guardian and your trustee are able to carry out your wishes. This plan is an evolving document and will change as your family grows and your values change. You should make sure to review your plan frequently (at least every 5 years) to reflect changes in your family, family relationships and growth of your children.

Keeping the Peace in the Family: Being Named Trustee

Children who are named as a Trustee have a difficult task of distinguishing their familial responsibility with that of their fiduciary duty to the beneficiaries of the trust.   While you may be trying to keep peace in the family you are also being tested under the guidelines of the California Probate Code.  Every Trustee must produce an annual trust accounting upon demand by a beneficiary. There are formal and informal accountings that are acceptable under the probate code.  Although this beneficiary is your sister, she still has rights that the Court will recognize under the California Probate Code.  Your job is to distribute the assets of the Trust as quickly as possible to the beneficiaries.  This can be done in kind or in cash.  It is rare when all the beneficiaries are on the same page with how the assets should be handled, usually because each beneficiary has a different economic situation, needs, or personal goals.  One beneficiary may need the cash while another is willing to hold on to a property if there is a down turn in the market and maximize the value of the assets.   A trustee can authorize a buy-out of one beneficiary but that beneficiary must be offered a fair market value for his/her share.  In short, there are myriad issues that have to balanced with statutory duties, a daunting task for anyone.

One thing that is important in administering a trust is that the trustee promotes transparency.  Open up the books (which you should have been maintaining since day one), share the supporting documentation if necessary (e.g., bank statements, investment portfolio information dividend statements, etc…).  Verify that all income and principal are properly accounted for in accordance with general accounting practice guidelines. Beneficiaries get nervous when they feel that the trustee is hiding something.  You usually do not find this with a corporate trustee, but a family member who has been named trustee, especially another sibling, conjures up familial issues that have no relation to the trust administration. How many siblings have childhood grudges that couldn't be forgiven or forgotten? We've heard quiet a few. In situations like this, the administration of the trust can quickly spiral out of control.

In representing a Trustee, an attorney’s focus is to guide the trustee in the administration of the trust.  The terms of the Trust set forth the guidelines for the distribution of the assets of the trust.  The laws as set forth under California Probate Code set the guidelines as to a Trustee’s fiduciary responsibility in investing, distributing and accounting for the trust assets.  A breach of a Trustee’s fiduciary responsibility in some cases can result in personal liability to the Trustee.  Lawsuits in trust administration are costly and devour time and energy.  They also reduce the size of the estate and the final distribution of the trust and serves to prolong the process and do further damage to the family integrity.

It’s our job to act regardless of the emotional involvement and simply do what is just and equitable.  We don’t mind being the proverbial fall guy.