Responsibilities Of An Estate’s Trustee
A trustee is a person appointed by another person to manage that person’s affairs upon death, disability or resignation. The process is very important in that the trustee is responsible for: (1) investing assets to obtain a reasonable rate of return; as well as (2) making distributions to beneficiaries in accordance with the terms of the will and trust or in the trustee’s discretion taking into account, perhaps, the expressed intentions of the grantor/decedent.
Serving Families Across The Generations
If you have been designated as a trustee or if you plan to designate someone as the trustee of your estate, the attorneys at the Elder Law Centers in Boston, Massachusetts, can help you.
A trustee is not entitled to a greater share of the estate, but is rather acting in a fiduciary capacity and must, at all times, act in the best interest of the estate. Self-dealing is prohibited and will be a cause for removal.
It is common to have more than one trustee and recommended to have an odd number of trustees with decisions made by majority vote.
If a decision is made to have family members serve, it is common to have the third party act as an independent voice, sometimes known as a “independent trustee.” This person should be a person experienced in the administration of estates, resolving disputes and should have experience both as a mediator/litigator, tax, and probate attorney.
For more information about services in this regard, please contact the Elder Law Centers of Cushing & Dolan, P.C.
Understanding The Role Of An Independent Trustee
An independent trustee plays a crucial role in managing trusts, especially in complex estate situations. This individual is not a family member but a professional with experience in estate administration, dispute resolution and legal matters such as tax and probate law.
Objectivity And Conflict Resolution
When family members serve as co-trustees, disagreements can arise due to personal interests or emotional involvement. An independent trustee serves as a neutral third party, which is essential for:
- Breaking deadlocks: In cases where co-trustees must agree unanimously, an independent trustee can provide the deciding vote, preventing stalemates over investment or distribution decisions.
- Balancing competing interests: They ensure that the needs of current beneficiaries, like a surviving spouse, are balanced with those of future beneficiaries, such as the grantor’s children.
With their mediation skills, they can resolve conflicts before they escalate to costly legal battles in probate court. Families in Massachusetts often retain independent trustees to ensure fair and unbiased management of their trusts.
Critical Tax Planning Functions
Independent trustees are vital in advanced estate planning due to their non-beneficiary status, which helps keep trust assets out of a beneficiary’s taxable estate. They can:
- Make discretionary distributions: By holding the power over principal distributions, they prevent the IRS from including the trust principal in a beneficiary’s estate.
- Exercise tax-sensitive powers: This includes changing the trust’s location to a tax-favorable state or updating trust provisions through “decanting.”
- Manage grantor trusts: They ensure that trusts qualify for intended tax treatments without causing unintended consequences for the grantor.
Ideal Qualifications For An Independent Trustee
Selecting the right independent trustee involves considering their experience in:
- Fiduciary law and probate: Knowledge of the Massachusetts Uniform Trust Code and probate procedures.
- Tax planning and compliance: Ability to handle complex tax filings and understand tax implications.
- Investment management: Experience in managing investments under the Uniform Prudent Investor Act.
For complex estates, an independent trustee is often a professional entity, such as a law firm partner or a corporate trust company. This ensures that the trust is managed effectively and in compliance with all legal requirements.
Cushing & Dolan, P.C., Is Your Legal Resource
If you have questions about trusteeships and how a trustee is appointed or wish to speak with a lawyer, send us an email or call 888-759-5109. Free initial consultation.