Trustees have significant responsibilities in any type of trust, such as managing and administering assets. Some might consider their tasks mainly administrative, but their duties can pose vital implications for the trust’s grantor and beneficiaries, often involving the estate’s value and purpose.
Because they oversee and manage others’ belongings or properties, trustees must adhere to specific obligations financially and legally. If they fail to maintain acceptable honesty and diligence, they may face claims, especially if they disregard the trust’s best interest. Incidents that can bring about claims against trustees include the following:
- Reducing the trust’s value with risky and unreasonable investment decisions – These decisions can be forms of mismanagement, necessitating legal action.
- Making decisions favoring specific beneficiaries – Trustees must always be impartial and conduct transactions without showing bias.
- Managing the trust to yield personal benefit – It often happens when the trustee is also a beneficiary of the trust.
- Using the trust’s value in inappropriate ways – Misappropriation is a severe violation of the trustee’s fiduciary duties.
Other types of misconduct can be violations based on the circumstances, especially if the trustee committed the offense without considering the trust and the beneficiaries’ welfare.
Being transparent to prevent trust-related disputes
Trustees should always be transparent when making transactions involving assets in the trust. If there are misunderstandings with other involved parties, it could be more likely for disputes to happen. Aside from discussing and clarifying issues efficiently, trustees should also comply with all legal requirements established in the trust agreement. It might seem tedious, but being thorough can help ease beneficiaries’ worries, especially their concerns related to the trust and the assets within it.