Serving as the administrator of a trust, also known as a trustee, can be a great honor. In many instances, an individual has named another person in his or her will to serve as the administrator of a trust because he or she trusted the sound judgment of the named person. As much of an honor the title may seem, there are significant responsibilities that come with it. Both trustee and trust beneficiaries need to know about these duties so that they can ensure that the trustee acts in accordance with the law.
At the heart of trust administration is the fiduciary duty. In short, a fiduciary is an individual who must act in the best interests and for the benefit of another. In the case of a trust, the trustee must make all decisions for the benefit of trust beneficiaries. This can be overwhelming to some trustees. After all, they may be responsible for investing trust assets and/or distributing them in accordance with the trust’s terms.
Making matters even more stressful is the fact that trustees can be help liable for breaching their fiduciary duty. Therefore, if they simply sit on investments that were already made by the decedent without taking advantage of financial opportunities, a beneficiary may accuse them of breaching their fiduciary duties. The same holds true for improper distribution of trust assets and the use of trust assets for personal gain or in contradiction of the trust’s terms.
Adhering to the terms of a trust can be an exercise in linguistic interpretation. However, Arizonans can avoid these situations by having a carefully crafted trust. In the event that issues with one’s fiduciary duties arise, it may be wise for a trustee and beneficiaries alike to seek out legal counsel to protect himself or herself as fully as possible. This legal ally can help ensure financial accountings are accurate, asset transfers are valid, and trust assets are managed appropriately.