Should a family member be a trustee?
Asked by: Modesta Ward | Last update: April 23, 2025Score: 4.9/5 (66 votes)
While in some situations it is appropriate for a sibling or other family member to serve as trustee, in many cases, particularly with a larger trust, naming a family member is not the best decision, for several reasons. First, clients fail to appreciate the amount of work involved in being a good trustee.
Can family members be a trustee?
Being named trustee for a family member is an important responsibility. In this role you will take on a number of essential tasks such as managing money, making decisions that maximize the wellbeing of the trust beneficiary (your loved one), and reporting on how the trust funds are being used.
Is there any downside to being a trustee?
When you become a trustee, you take on a serious obligation and serious personal liability. By law, you now owe a “fiduciary duty” both to trust itself, and more importantly, to the trust's beneficiaries. Beneficiaries are the people who get stuff from the trust.
Who is the best person to be a trustee?
Friends and Family. Family members and friends may be closer to the beneficiaries and may be more likely to understand beneficiary needs as well as family dynamics. A friend or family member may generally still charge a reasonable trustee fee for serving in this role, but they usually don't charge an administrative fee ...
Why a beneficiary should not be trustee?
Naming the same person as trustee and beneficiary can be problematic. Not only can it lead to a trustee and beneficiary conflict of interest, but it can make it difficult for the trustee to uphold their duty to treat all beneficiaries equally.
Can a Family Member Serve as a Trustee?
Who has more right, a trustee or the beneficiary?
And although a beneficiary generally has very little control over the trust's management, they are entitled to receive what the trust allocates to them. In general, a trustee has extensive powers when it comes to overseeing the trust.
What makes a bad trustee?
Common Breaches of Trustee Duties in California. Too often, trustees breach their duties. Some of the most common ways they do this include breaches of trust, funds misappropriation, poor management, fraudulent acts, failure to act, and engagement with a competitor.
Who has the most power in a trust?
Generally speaking, once a trust becomes irrevocable, the trustee is entirely in control of the trust assets and the donor has no further rights to the assets and may not be a beneficiary or serve as a trustee. Who can serve as trustee?
Can a trustee take money from a trust?
The trustee generally has the authority to withdraw money from a trust to cover the cost of third-party professionals, as well as any other expenses arising as a result of administration.
Does a trustee get paid?
In exchange for their services, California Probate Code §15681 allows trustees to receive “reasonable compensation.” However, if the trust document itself specifies different pay arrangements, then under Probate Code §15680, trustees are legally entitled to be compensated according to the terms of the trust.
Who Cannot act as a trustee?
Anyone 16 and over (18 for an Unincorporated Association or Charitable Trust) who is not 'disqualified' can be a Trustee. The reasons for disqualification were set down by the Charities Act 2011, and were designed to prevent people convicted of financial crimes, or who made serious financial errors, becoming trustees.
Can a trustee steal money from a trust?
Yes, when a trustee steals from a trust, they are in effect also stealing from beneficiaries. This is because beneficiaries are supposed to ultimately inherit all the assets contained in the trust.
Can a trustee ignore a beneficiary?
A trustee may withhold money or assets from a beneficiary if they must focus on other responsibilities surrounding the estate. For example, if the estate becomes subject to a tax audit or litigation arises, a trustee may refuse to give beneficiaries their share of the assets until these issues are resolved.
What is the first thing a trustee should do?
Asset Inventory
The first step is to conduct a thorough inventory of all trust assets. This includes everything from bank accounts, stocks, and bonds to real estate and personal property. It's like creating a detailed list of everything the trust owns. You can't manage what you don't know exists.
Can a beneficiary be a trustee?
The short answer is yes, a beneficiary can also be a trustee of the same trust—but it may not always be wise, and certain guidelines must be followed. Is it a good idea for a beneficiary to be a trustee? There are good reasons for naming a trust beneficiary as trustee. For one, it is convenient.
Why would someone be a trustee?
Trustees are the volunteers who lead charities and decide how they are run. You may have heard them called board members or the board. Trusteeship is a great way of contributing to causes you care about and developing strategic and leadership skills at the same time.
What is the biggest mistake parents make when setting up a trust fund?
One of the biggest mistakes parents make when setting up a trust fund is choosing the wrong trustee to oversee and manage the trust. This crucial decision can open the door to potential theft, mismanagement of assets, and family conflict that derails your child's financial future.
What happens if a trustee spend the money?
Ultimately, trustees can only withdraw money from a trust account for specific expenses within certain limitations. Their duties require them to comply with the grantor's wishes. If they breach their fiduciary duties, they will be removed as the trustee and face a surcharge for compensatory damages.
Do you pay taxes on a trust inheritance?
Beneficiaries of a trust typically pay taxes on the distributions they receive from a trust's income. The trust doesn't pay the tax. Beneficiaries aren't subject to taxes on distributions from the trust's principal, however. The principal is the original sum of money that was placed into the trust.
Is being a trustee a big deal?
Understand what you're asking.
The truth is, the complex responsibilities of a trustee require a fair amount of specific skills, knowledge, and experience. It is not a role to be taken lightly. Being a trustee is also a role that can be quite time consuming, more so than most people assume.
Can a trustee be a family member?
All in the family
In most instances, clients select family member trustees for both emotional and financial reasons. Clients may believe that a family member will have an emotional attachment to the beneficiary of the trust and as trustee will stick with the job, come what may.
Can an executor override a trustee?
Because they both have separate areas of responsibility, an executor cannot override a trustee, and a trustee cannot override an executor. Effectively, executors and trustees have separate duties and control over separate administrations, so while they often collaborate, they need not.
Is there a risk to being a trustee?
Jean, we discussed some of the responsibilities that trustees have. They are held by courts to the highest legal standard. If you fail to fulfill your duties, you can be subject to lawsuits and can be held personally liable for those mistakes.
Can a trustee kick you out?
In general, the steps to this process are: The trustee must send a written notice to the beneficiary to vacate the real property. Under California law, if the beneficiary has been in possession of the property for less than a year, then a 30-day notice is sufficient.
What a trustee can and Cannot do?
A trustee cannot act outside the authority granted to them by the trust. They must manage assets and investments according to its terms and not engage in activities not authorized by it.