Don’t Blindly Trust Trusts
The best thing a nominated Trustee can do is decline to serve (I’m only kidding…or perhaps not). The second best thing is to hire an attorney. It’s no secret among those who regularly practice in trusts and estates that living trusts have been oversold for the past 15 years.
By “living trust,” I am referring to a trust you set up during your lifetime and you re-title your assets into the name of the Trustee, so that you don’t actually own your assets outright. The trust dictates how your assets are paid during your lifetime, and how they are distributed upon your death.
Trusts are often marketed as a more economical and a more efficient way to transfer your assets to family, friends or charity. The reality is that the majority of trusts we see go for months or years without being properly administered and with no oversight, and are often difficult to interpret. Many are simply sloppy.
Trusts can be a useful planning tool if done correctly and if the Trustee is aware of the obligations and rules which apply to him or her. That is often not the case, and Trustees can get into hot water quickly if they do not hire an attorney to advise them on the minefield that is trust administration. Many times the errors are inadvertent, but they expose the Trustee to personal liability, nonetheless. If you are set up to serve as a Trustee, or are considering creating a trust for yourself, hire an experienced attorney to advise you on the proper way to handle trusts.