One of the reasons people uses trusts in their estate planning, is that the person named as a trustee has a legal duty to put the trust’s interests first, rather than their own interests. This is called a “fiduciary duty,” and it becomes very important when planning for the future of your assets and family. It’s an enforceable legal obligation says the article “Fiduciary Duties in Trusts and Estate Planning” from yahoo! finance.
A trustee is the person appointed to be in charge of a trust. There are many different kinds of trusts, created to own assets, including money, life insurance policies and homes. The person named as trustee in the trust document makes decisions about the trust assets to benefit the beneficiary’s best interests.
Trusts created while a person is living are known, appropriately enough, as living trusts. There are people who choose to be their own trustees and manage their trusts for as long as they are able. Married couples may be co-trustees on their trusts. The trust documents should be prepared, so that upon the death of one spouse, the surviving spouse becomes the trustee and manages the account.
The person creating the trust should also name a successor trustee. This is the person who will manage the trust when the trustee or the co-trustees are no longer competent to manage the trust. That might be because they have died or because they have become incapacitated due to an injury or illness.
The fiduciary duty of a trustee is to act in the best interest of the beneficiaries. These are some guidelines:
There are three fiduciary duties when it comes to a trust: loyalty, care and full disclosure. The trustee(s) must act in the best interest of the trust and its beneficiaries. This is a high standard and why the decision on who to name as a trustee is so important.
The terms of every trust vary, depending on the type of trust and the needs of the estate plan. The trustee needs to be familiar with the trust and its directions, so they can perform correctly.
An estate planning attorney is needed to draft trusts, so they reflect the wishes of the person and their goals. Using a downloaded form or even a standard legal form is a big risk for families.
Reference: yahoo! finance (July 8, 2020) “Fiduciary Duties in Trusts and Estate Planning”
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