Trust administrators have an important job. It is up to them to handle the trust assets and invest them as is appropriate. Then, once the creator of the trust has passed on, the trust administrator has to disperse the trust funds per the terms of the trust. These are all heavy responsibilities, so those who have been named a trust administrator may want to seek professional advice, such as the advice of an attorney.
Yet even professional trust administrators occasionally get complaints from trust beneficiaries. Oftentimes these complaints come up when beneficiaries are not receiving regular notices about the administration of the trust. Sometimes good and timely communication with the beneficiaries about the trust can ward off complaints. Being proactive and working with the appropriate formality can help.
In addition, if a beneficiary’s complaint goes above and beyond a routine request, the trust administrator may want to consult with an attorney, to ensure the matter is handled appropriately. This is especially important because in certain instances a trust administrator can be held personally liable for mismanagement of the trust.
Indeed, it may be possible to bring a lawsuit against a trust administrator who has mismanaged the trust or made other errors. For example, if a trust administrator made poor investment choices, he or she might be liable. The investments could benefit one beneficiary over another, could be considered either too speculative or too conservative, could be considered self-dealing or could cause the casualty insurance to lapse. This is why it’s important to seek professional advice with these matters, keep beneficiaries informed about the trust assets, keep a full and accurate account of your decisions regarding the trust and be as formal in your role as trust administrator, as if you were not related to the creator of the trust or the trust beneficiaries, even if this is not so.
As you can see, trust administrators have a lot riding on their shoulders. While it may be an honor to be chosen administrator of a loved one’s trust, it is often a role that should not be handled without first securing the professional advice of an attorney who can explain the legalities behind trust administration. This will help ensure your rights and interests and protected.
Source: American Bar Association, “Guidelines for Individual Executors & Trustees,” accessed Oct. 17, 2016