Understanding Your Responsibilities As A Trustee Or Fiduciary

An administrator of a trust acts as a fiduciary for a trust’s beneficiary. As such, trustees are legally liable for violations of fiduciary duty that harm the beneficiary of a trust. Additionally, trustees are responsible for preparing and filing an annual tax return and report for the trust they administer. Failure to provide accurate reports and tax returns can result in civil litigation or criminal charges.

At the Masatani Soroy Law, our attorneys advise both trustees and beneficiaries in regard to trust administration issues and fiduciary responsibility. For trustees — whether corporate or private — we review the terms of a trust to ensure you comply and adhere to all applicable terms and conditions. For beneficiaries, we audit your trust in order to expose financial mismanagement or violations of fiduciary responsibility.

Regardless of whether you are a trustee or a beneficiary of a trust, we have the knowledge and resources needed to help you. We invite you to give us a call to make an appointment for an initial consultation to discuss your specific concerns.

The Duties Of A Fiduciary

Fiduciaries are responsible for protecting and promoting the interests of a beneficiary. Consequently, trustees — as fiduciaries — have a duty to act in the following manner:

1. Trustees must act in accordance with the professional standards of their profession in providing the maximum amount of protection for a beneficiary. They must provide and disclose information that allows for the best possible management of a trust.
2. The interests of the beneficiary should always take precedence over those of the trustee.
3. A trustee cannot act as a dual agent in any action or enterprise that could conflict with the interests of their beneficiary. Should a trustee decide to act as a dual agent in any way, he or she must notify the beneficiary first. For example, if a trustee decides to invest trust money in stock or business he or she has an interest in, the beneficiary should be consulted first.
4. A trustee is required to consult with a beneficiary whenever the trustee acts in a manner that is opposed to the interests of the beneficiary. Before the action can be undertaken, permission must first be obtained from the beneficiary.

Corporate And Family Trustees

By and large, there are two kinds of trustees: corporate and family. There are advantages and disadvantages associated with each. In general, corporate trustees provide a higher level of security and less flexibility, and cost more. Family trustees, on the other hand, provide less security, are more flexible, and do not cost as much.

Since corporate trustees are often financial institutions, they are almost always bonded and secured. As a result, if a trust is mismanaged, there is a greater likelihood that a beneficiary can recover some of his or her losses. Although family trustees can be insured, they usually aren’t, making it difficult to recover money when a trust is financially mismanaged.

Trust Lawyers Serving You

There are a number of legal and financial issues to consider when creating or managing a trust. At the Masatani Soroy Law, we’ve helped clients create special needs trusts, revocable/irrevocable trusts, testamentary trusts, and spendthrift trusts, as well as charitable remainders. We understand trusteeship and fiduciary responsibility from both the trustee’s and beneficiary’s perspective. To schedule a confidential consultation, call 310-694-5527 or fill out our email intake form.