Serving as a trustee is more than just a title; it’s a legal responsibility that comes with significant obligations. On a recent episode of the Elder Law Report podcast, attorneys Haley Matson and Jordan McIntyre of McIntyre Elder Law shared valuable insights into what trustees need to know. From fiduciary duties to common mistakes and best practices, this discussion highlights the importance of handling a trust with care, transparency and professionalism.
Understanding the Role of a Trustee
A trustee is appointed to manage the assets of a trust on behalf of beneficiaries. Unlike casual financial management, this position carries what’s known as fiduciary duty; a legal obligation to act in the best interest of the trust and its beneficiaries.
Jordan McIntyre emphasized that trustees’ obligations are clearly outlined in trust documents and supported by law. In North Carolina, trusts are governed by Chapter 36.
Core Fiduciary Duties of a Trustee
Haley Matson explained that trustees are held to strict standards when handling another person’s assets. These include:
- Duty of Loyalty: Always act in the best interest of beneficiaries.
- Duty of Impartiality: Treat all beneficiaries fairly, without favoritism.
- Duty of Prudence: Manage assets carefully and responsibly.
- Prudent Investment Standard: Make thoughtful and cautious investment decisions.
- Duty to Administer: Follow the terms of the trust as written.
These responsibilities require careful record-keeping, documentation, and communication with beneficiaries.
Common Pitfalls Trustees Should Avoid
Haley and Jordan noted that trustees often make avoidable mistakes, sometimes out of convenience or misunderstanding. Some of the most common pitfalls include:
Mixing Personal and Fiduciary Funds: Commingling money can lead to legal and financial complications.
Using Trust Funds for Personal Benefit: Even small personal expenses, no matter how seemingly innocent, can create liability.
Ignoring the Trust Document: Trustees must follow the trust’s instructions, even if they disagree with them.
Failing to Communicate: Lack of transparency with beneficiaries can cause disputes.
Neglecting Proper Record-Keeping: Trustees must be able to provide a clear accounting of all transactions if requested.
Best Practices for Trustees
To avoid issues and protect themselves legally, trustees should follow these best practices:
Keep Funds Separate: Open dedicated trust accounts and never mix personal money.
Document EVERY Transaction: Maintain receipts, bank records, and accounting logs.
Seek Legal Guidance: If unsure about obligations, consult an attorney to avoid mistakes.
Maintain Transparency: Communicate regularly with beneficiaries about decisions and trust activities.
Follow Instructions to the Letter: Unless the trust grants discretion, stick to the document’s terms.
When to Seek Professional Help
Administering a trust can be overwhelming. Trustees who struggle with compliance, accounting, or communication may want to seek professional support. Law firms like McIntyre Elder Law can:
- Review trust documents.
- Provide guidance on fiduciary obligations.
- Assist with trust accountings.
- Serve as trust administrators when needed.
Key Takeaway
Being a trustee is not a casual role; it’s a serious fiduciary responsibility that requires diligence, honesty, and careful management. By understanding their duties, avoiding common pitfalls, and seeking professional guidance from an attorney when needed, trustees can ensure they fulfill their obligations while protecting both the trust and themselves from liability.
Why You Need an Elder Law Attorney
Serving as trustee is both an honor and a responsibility. Trustees must uphold their fiduciary duties and keep clear records. With careful attention and professional guidance, trustees can carry out their role effectively while protecting both the trust and themselves.
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Attorney Jordan McIntyre
Estate Planning & Elder Law Attorney
McIntyre Elder Law
Shelby, NC
Attorney Haley Matson
Estate Planning & Elder Law Attorney
McIntyre Elder Law
Charlotte, NC
