When creating a trust one of the most important decisions you must make is who will be the trustee.  The person chosen for this role will ideally be someone that the beneficiary knows and in which the grantor (creator) of the trust has a great deal of faith.  Trustees are in an important position and with that position comes a great deal of responsibility.  Here are some of the primary responsibilities of a Michigan trustee:

Trust Administration:  Under Michigan law, a trustee must administer the trust in good faith expeditiously in accordance with the trust terms and for the benefit of the beneficiaries. While this may sound simple, administering a trust involves a great deal of care and precision.  There are many aspects to trust administration.  For instance, a trustee is required to locate and notify beneficiaries and creditors.  The trustee must also pay the debts of the trust and identify trust assets.  The trustee will also be required to manage distributions to beneficiaries.

Duty of Loyalty: The trustee owes a duty of loyalty solely to the beneficiaries of the trust.  This means that the trustee cannot serve their own interest above those of the trust beneficiaries. This involves striking a careful balance between the beneficiaries’ interests between themselves as well as that of the trustee.

Fiduciary Responsibilities:  A trustee is a fiduciary which means that they have a financial responsibility to the beneficiaries of the trust and must place their interest above their own.  This responsibility can be complicated as trusts may involve multiple direct beneficiaries as well as those with interests in the trust which are subject to the direct beneficiaries’ interest.  This duty also includes taking control of the trust property, enforcing and defending from claims against the trust on behalf of the trust, and paying taxes and expenses of the trust.

Act as a Prudent Investor: The trustee is required to act as a prudent investor in their actions with the trust property.  The trustee must be knowledgeable about investments and be careful in the areas which they invest the trust property.  Also, the investments must take into account the interests of both current and future beneficiaries.  Another consideration will be how the investment will affect the beneficiary in the future.  For instance, if the trust is designed to pay for future educational expenses, a trustee may need to determine if the investment strategy support this goal.

Duty to Keep Records and Furnish Accounts:  A critical duty of any trustee is to record and report all trust income, expenses, and disbursement transactions.  This information will need to be provided to trust beneficiaries on at least a yearly basis.  Trust beneficiaries are also permitted to request an accounting from the trustee.

Being a trustee involves these any many responsibilities.  When a trustee is knowledgeable about their responsibilities and duties, they can be an effective and essential component of a well- functioning trust.  To understand these obligations, it is important to consult with an experienced attorney.  We have experience with trusts and can provide insight regarding the trustee relationship. Please contact us online or by phone if we may be of assistance.

Post A Comment