A sole trustee can make decisions without the need for additional input, write checks, sign documents, and only needs a single attorney to represent her. The duty of the trustee is to act in the best interest of the beneficiaries and carry out the wishes of the decedent.
A sole trustee streamlines the communication and decision-making process and improves consistency of the approach. Using professional expertise, the sole trustee will implement effective governance controls, so the scheme can achieve its objectives in an efficient and cost-effective manner.
The person you choose to act as a Trustee should also be financially responsible, because they will be handling the investments for the benefit of your beneficiaries. The Trustee should be someone who can get along and have a good relationship with the beneficiaries of your trust.
A corporate trustee company is recommended due to the greater level of asset protection it provides. In contrast with an individual trustee, a corporate trustee allows for greater separation of trust's assets and the personal assets of the directors and shareholders.
Sole Trustee refers to the person who has signed the Original Declaration of Trust.
Example: Glenn appoints his spouse, Anna, as the sole trustee of a trust intended to avoid estate taxes at her death. If the trust is not properly drafted, the IRS could include the trust in Anna's gross estate because she cannot be both sole trustee and sole beneficiary.
A corporate sole trustee sits in the place of a traditional trustee board, taking responsibility for pension scheme governance and becoming a trusted point of contact for all aspects of the scheme.
Trustees can be held personally liable for failure to adequately serve the needs of the trust and its beneficiaries. Pursuing a fiduciary role through a Private Trust Company (PTC) insulates individuals from their personal risk to some extent but transfers those risk to the PTC.
Generally, the same person may be both a beneficiary and a trustee; however, the sole beneficiary of a trust cannot be the sole trustee for the trust. Trustor(s)—The one who creates, or whose confidence creates, a trust.
The simple answer is yes, a Trustee can also be a Trust beneficiary. In fact, a majority of Trusts have a Trustee who is also a Trust beneficiary. Being a Trustee and beneficiary can be problematic, however, because the Trustee should still comply with the duties and responsibilities of a Trustee.
As previously mentioned, trustees generally cannot withhold money from a beneficiary for no reason or indefinitely. Similarly, trustees cannot withdraw money from a trust to benefit themselves, even if the trustee is also a beneficiary.
Many individuals consider choosing a family member instead of a professional to fulfill this role, but this should be avoided in most situations. Naming a family member as your trustee increases the likelihood of fighting and litigation.
A trustee of a trust is legally responsible to manage the trust in accordance with the terms of the trust document. A trustee can be an individual, a corporate trustee, or a combination of both. It's important to explore different scenarios before making a decision.
A trustee must abide by the trust document and the California Probate Code. They are prohibited from using trust assets for personal gain and must act in the best interest of the beneficiaries. Trust assets are meant for the benefit of the trust beneficiaries and not for the personal use of the trustee.
More importantly, there is no government agency that oversees Trustees on your behalf or forces Trustees to act appropriately. Instead, each individual Trustee is expected to act according to the Trust document and California Trust law, even though few private Trustees even know the true extent of their duties.
Beneficiaries are only liable for debts of a Trust to the extent the beneficiary received assets from the Trust. If the beneficiary received $10,000 from the Trust, and the Trust owes $1,000 in debt, then the beneficiary may have to pay back $1,000 to cover the debt.
A conflict of interest can arise when the trustee's personal gain clashes with the beneficiaries' interests. They may favor themselves or misuse trust assets. Balancing all parties' interests is crucial. It requires careful management to ensure fairness and maintain the trust's integrity.
If one of the beneficiaries dies before the deceased, their inheritance will fail. This means that the legacy they were due to inherit will be kept within the deceased's estate and distributed to the surviving beneficiaries.
If you and your sibling are co-beneficiaries on a policy, the insurance company will split the sum before it's distributed. If anyone — even a parent — names you as a beneficiary, you're not obligated to share the money you receive with a sibling.
A trustee can absolutely steal from a family Trust. To be clear, a trustee cannot take funds from the Trust for themselves directly. Instead, they will find loopholes so that the funds from the trust are dispersed in a way that benefits them.
A trustee has all the powers listed in the trust document, unless they conflict with California law or unless a court order says otherwise. The trustee must collect, preserve and protect the trust assets.
Under California trust law, trustees can be held personally liable for losses incurred due to a breach of trustee duties. Trustees have a legal obligation to act in the best interest of beneficiaries and the trust. This obligation is also known as their fiduciary duty.
If You Decide Not to Take the Job as Trustee
Notify each of the trust beneficiaries that you have done so. It might seem odd to resign from something that you've never agreed to do, but that's the way it works.
A fund with only one member can have a trustee that is a company with a single director but single member fund CANNOT have just one individual trustee other than under certain temporary and unusual circumstances. A single member fund with individual trustees has to have at least two trustees in the long run.
The short answer is yes. It is fairly common for beneficiaries to serve as trustees, especially in family trusts, unless the underlying document forbids it. It does not seem to matter whether it's irrevocable or revocable.