If someone with a trust has passed away, and you were named successor trustee of that trust, you have a lot of work to do. You may be trying to decide between hiring a lawyer or going it alone to save money on attorneys' fees.
Although some tasks can be completed on your own, the overall process should be carried out with the assistance of legal counsel. Here are some things to consider.
A trustee has many fiduciary duties to carry out
If you have accepted the job of successor trustee, your fiduciary duties include the following (this is just a general overview):
- Carry out the terms of the trust (to do this, you have to read and understand the trust)
- You may have to insure the trust property is productive (earning income)
- Administer the trust solely in the interests of the beneficiaries
- Avoid conflicts of interest
- Manage the trust property correctly (keeping detailed records, not mixing with your own property, etc.)
- Administer the trust with the reasonable care, skill, and caution of a prudent person
If you breach these duties, you can be held liable in court. Your attorney will help make sure you carry out these duties correctly as required by law.
Trust administration can be difficult
The process can be time consuming and confusing. For instance, you need to send out notices to the heirs and beneficiaries. You need to have the assets inventoried and appraised. You need to provide a detailed accounting of trust expenses. For real estate, there is important paperwork that must be completed to change ownership and avoid reassessment. These are just some of the numerous tasks for you to carry out.
Hiring counsel takes the burden off your shoulders and helps make sure things get done right and within legally prescribed time limits.
There might be litigation
Disputes often arise in the context of trust administration. A common situation is when a disinherited beneficiary decides to file an action to contest the trust. If there is litigation, you will need to hire an attorney to go to court.
You can be held personally liable
Litigation may also arise as a result of your performance as trustee. If you mismanage the trust, the beneficiaries may take you to court. If the court finds wrongdoing, you could be held personally liable for any loss to the trust. This is a primary reason for hiring an attorney. Legal counsel will help make sure you don't make mistakes that lead to litigation. Attorney fees are a small price to pay compared to a court order to pay back the trust for losses.
Legal fees are paid by the trust
As trustee of the trust, you are generally authorized to hire professionals (attorney, CPA, etc.) to carry out the terms of the trust at the expense of the trust. The price is usually moderate (if there is no litigation); if there are multiple beneficiaries, it is essentially divided between them, making it a reasonable expense overall.
If you have to administer a trust, the first thing you should do is speak with an attorney about what you need to do. Even if you don't hire someone (or only hire someone in a limited scope), at least you can get an idea of what is involved, see if it's something you can handle on your own, and make an informed decision.
Helix Law Firm can help with trust administration
Our firm can help you administer the trust correctly from the start, so you don't become overwhelmed.
If you're interested in learning more, please call us at (619) 567-4447 to schedule a free consultation.