Beneficiaries Acting As a Trustee

Beneficiaries Acting As a Trustee

Clients frequently name their children as beneficiaries of their revocable living trusts. Several clients want their child to be the trustee of the trust, but they’re not sure if that’s legal. Yes, a beneficiary can be a trustee of a trust in general—but it’s important to follow specific guidelines since it’s not always a good idea.

Should a Beneficiary Be a Trustee?

A trust beneficiary might be named as a trustee for a variety of reasons. Because the beneficiaries of a trust are often known, liked, and trusted by the trust maker, it makes sense to choose one of them as a trustee. A trustee-beneficiary is also interested in seeing that the trust is handled according to the trust maker’s wishes since it benefits them. However, if the beneficiary is dissatisfied with their share of the trust earnings, this may not be the case.

The Role of a Trustee-Beneficiary

The beneficiaries of a trust bear fiduciary responsibilities to all trustees. This implies that the trustee must act in the beneficiaries best interests and make sure that the trust is handled properly. When the trustee is also a beneficiary, however, the duty to act in the best interests of the beneficiaries becomes messier. This means that the trustee should communicate with the other beneficiaries honestly and on a frequent basis about what they are doing and why they are doing it.

A trustee-beneficiary should strictly adhere to the trust’s conditions and avoid giving the impression of favoritism. This may seem self-evident, but many trustees believe that being a trustee entails being able to do whatever they like with the money and property in the trust. 

Conclusion

A trustee’s duties can be time-consuming indeed, and it is only fair that the trustee is compensated for time spent on trustee tasks. A trustee can strengthen their argument for further compensation by keeping careful records of the tasks accomplished and the time spent on those tasks.

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