There are plenty of things you should be doing when you accept the role of a Trustee of a Trust. For instance, you should stay organized from the start, make decisions prudently and responsibly, document everything, and, of course, take your role and responsibilities seriously. These responsibilities and other “to-dos” are typically discussed at length, and most of them feel like no-brainers. That said, very little has been said about what you should NOT do as a Trustee.

You would think that knowing what not to do should come naturally, even for a first-time Trustee. However, anyone who has been a Trustee before will tell you that could not be further from the truth.

With that in mind, we have created a list of things you should NOT do as a Trustee.

Avoid These Trustee Pitfalls

Do not immediately start cashing out assets, selling properties, or reinvesting assets.  

As Trustee, do not immediately cash out assets (particularly retirement plans, IRAs, and annuities), sell properties (particularly a business or real estate), or reinvest assets (such as cash, stocks, bonds, and mutual funds). The only possible exception to this would be if it is absolutely necessary to raise immediate cash for expenses or taxes. Even if you are required to do this, you should consult with appropriate professional advisors before doing so.

Do not let anyone pressure you to do something “now.”  

You should not let anyone (other than your attorney, of course!) pressure you into acting immediately following the Trustor’s disability or death. The first “hard” deadline when a Trustor dies usually is not until nine months after the date of death, and even then, you should take the time to properly consider actions before implementing them.

Do not commingle Trust funds with your own or use Trust funds for your own personal purposes or expenses.  

In addition, do not advance monies from your accounts to pay Trust expenses; the only exception to this might be for a brief period, following the decedent’s disability or death, if there are immediate expenses to be paid and bank accounts for the Trust have not yet been set up, and you cannot access existing ones.

Do not make loans to anyone, particularly yourself, from Trust funds, without first consulting with an attorney.

If you have to make a loan to anyone, please also consider the future need for liquid funds and then properly document these loans.

Do not deal directly with the IRS (or any other tax authority) or with an attorney representing someone else.  

Have a qualified professional do it for you.

Do not procrastinate.  

Please do not wait until the last minute to do things, especially when you may be required to gather information for your attorney or CPA. Do it well in advance of important deadlines.

Do not ignore phone calls, faxes, emails, and other forms of correspondence from beneficiaries or their legal counsel.  

Do not avoid them just because you do not like dealing with them, or you may think that you are in trouble, or some conflict may arise. Responding promptly, fully, and truthfully to questions and requests will often result in resolving potential trouble or conflict before it occurs.

Do not act alone.

This is especially true if there are other Co-Trustees. Only proceed alone if you have their proper written agreement to do so.

Do not give up when it appears that your Trustee duties may be too overwhelming or too difficult.  

Remember, you can seek the assistance of qualified professionals. Also, keep this in mind: many hundreds of thousands of other Trustees have worked their way through the Trust administration process … and survived!

Do not allow yourself to be bullied or intimidated by any of the beneficiaries.  

Seek out professionals to assist you in dealing appropriately with challenging beneficiaries or disinherited or omitted parties.

Do not speculate with Trust assets.

Even if you hope to make a large return, it is better to proceed with caution.

Do not lend Trust money to yourself.

No matter how good your security may be, please do not do it. The same is true for buying Trust assets for your own account or engaging in other forms of self-dealing.

Do not continue to hold an investment that a prudent person would not continue to hold.

Do not do this without an independent investigation of their quality as trust investments.

Do not delegate investment decisions to others. 

The Trust instrument may enlarge or limit investment powers, but you should always be prudent.

Do not favor or show partiality toward any beneficiary.

This includes yourself, if you happen to be one of the beneficiaries. 

Do not avoid giving reports to the beneficiaries regarding the status of the Trust Administration.  

You will want to seek out the beneficiaries’ cooperation and invite their input, depending on the circumstances. That said, keep in mind that you are the ultimate decision maker on managing estate assets.

Call Leigh Hilton PLLC Today!!

Having a competent attorney in your corner will help you and your family navigate the often overwhelming waters of protecting everything you own and everyone you love. That is our job, and we think we do it better than anyone else. Call Leigh Hilton PLLC so that we can help ensure you and your family are taken care of in the best way possible. 

Leigh Hilton PLLC wants to be your first call every time for any estate planning need. We look forward to serving you.