Trustees have a fiduciary duty to impartially administer the trust with care and loyalty. The guidelines discussed below can help to ensure that a trustee is not found in breach of their duty. The consequences of violating a fiduciary duty are broad, ranging from penalties and damages to possible felony charges.
While a trustee might attempt to navigate trust administration independently, a lack of professional guidance could contribute to mistakes. These blunders could eventually develop into court proceedings (and related court costs), fines, penalties, and/or removal.
Provisions in DIY wills can increase administrative expenses in probate, and can also cause estate administrative problems for executors.
Upon the death of the trust grantor, a successor trustee must manage several pressing matters. Our trust attorneys prepared a brief checklist below that can help successor trustees to navigate the initial stages of trust administration.
Legislation and drafting issues have prompted changes in trust drafting methods. Over the past few decades, shifts in trust drafting techniques have helped to prevent trust administration issues and preserve the best interests of beneficiaries.
Trustees are held to fiduciary standards. One of the fiduciary standards that trustees are held to is the Prudent Investor Rule.
A trust protector has significant power over trust administration. When critical matters hinge on one party, it's important to consider how a trust protector will be replaced if and when the time comes.
Limited options remain for late portability elections, but some estates may be eligible. A number of Private Letter Rulings have highlighted late portability election approvals.
The Net Investment Income Tax may be repealed at the end of 2017. Two proposals released by the Joint Committee on Taxation in March 2017 advise removal of the 3.8 percent NIIT, which has been in effect since 2013.