Consider a not uncommon scenario where a client, close friend or relative asks you to serve as trustee for a trust he or she is creating or has created. Most people, feeling honored, automatically say "yes." Many professional tax and legal advisers, however, recommend that a person asked to serve as a trustee takes the proverbial step back to consider the potential downside. Before you accept the role, consider the responsibilities being assumed and if you have the requisite time, energy, expertise and desire to handle the job.
A trustee serves in a fiduciary role that requires the trustee to act in the best interests of another. In the case of the trust, the trustee must act in the best interests of the beneficiaries. A trustee owes three primary duties to the beneficiaries: care, loyalty and impartiality. Moreover, the trustee must adhere to the express terms of the trust, such as protecting and securing the trust property and ensuring that it is not commingled with other assets. Fiduciary duty is the highest legal standard. Naturally, attorneys representing beneficiaries suing a trustee for negligence rely on this and as a result, trustees that do not do their jobs correctly run the risk of being sued. While you may not be concerned about legal action by the person who asked you to serve as trustee, it is the trust's beneficiaries, who perhaps are young or aren't even born yet, who would be the disgruntled parties taking legal action.
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