Pennsylvania Trustee Mistake Part 9
Failing To Understand The Role of Multiple TrusteesWhat am I and what do I do as a trustee?
A trustee is the person who manages the trust assets. A trustee can be a trust company with trust powers in your state, a lawyer, an accountant, a friend, or a relative. There can be more than one trustee and for large trusts it may be preferable. A trustee has a duty to protect the trust assets for the beneficiaries but may also be a beneficiary. The trustee holds legal title to the distribution of trust assets. And, under many trusts, there are more than one trustee and in some cases their duties and responsibilities are different.
The trustee has many duties and obligations to the trust and the beneficiaries, under the terms of the trust, by law under the Pennsylvania Uniform Trust Act, the Prudent Investors Rule, and among others the Uniform Principle and Income Act. The trustee may also have sole discretion or limited discretion over the trust assets. The duties and obligations imposed under these various codes and acts helps to make sure a trustee is acting appropriately and in the best interest of the beneficiaries.
But, a big mistake people make is not spending the time to understand what a trustee is and what a trustee does because they think the law will take care of the trust assets and the beneficiaries. Where there are multiple trustees, the trust instrument or related laws might control how they must act together. And, where trustees disagree each trustee may have certain duties to protect the beneficiaries and to protect themselves.
If you are reading this you have either been named a trustee or are interested in what a trustee is and what mistakes they can make. Be aware that if you have been named a trustee that you follow all these rules and regulations and act in the best interest of the beneficiaries. If you have not been named as a trustee and are looking into creating a trust make sure you pick a person you trust because being a trustee gives them a lot of freedom in managing the trust you have created.
See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:
Avoiding Trustee Mistakes No. 1: Trustees Failing To Understand The Trust Language
Avoiding Trustee Mistakes No. 2: Trustees In Trouble Making Early Distributions
Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule
Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act
Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act
Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly
Avoiding Trustee Mistakes No. 7: Failing to Properly Reform, Amend, or Terminate
Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance
Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees
Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job
David M. Frees III