What is a Trustee?
A Trustee is responsible for managing assets titled in the name of the trust. This could include real estate and financial accounts. In most cases, they are the only ones granted authority to access the funds in the trust, write checks, approve distributions, and conduct business on behalf of the trust assets.
They also have a legal obligation to the current and future beneficiaries to manage the trust appropriately and to make prudent investment decisions. If the initial trustee resigns or is unavailable to fulfill the role, a successor trustee is often named in the trust document as a secondary option.
It is important to carefully consider who you name as trustee. Will they have the knowledge to effectively administer and manage the trust assets while complying with current trust law? What impact would their relationship with the beneficiary have on them making distribution decisions, especially when the requests fall outside of the terms of the trust?
How Does a Trust Work?
A lot of people think trusts are only for the super wealthy — not true. Trusts can benefit anyone who wants to manage how they leave their money to their family. A trust can give you control over who gets what, and when, how they get it, and why.
How do trusts work? Trusts are like containers you can put things into. You, the grantor, can place assets – like your house, life insurance policies, investments, and other possessions – into a trust. These assets become the property of the trust and are managed by your trustee. You appoint the trustee to ensure your wishes are carried out. As a grantor, you decide who receives the assets inside your trust.
Typically, your spouse, your children, grandchildren, and charities of your choice are the beneficiaries who receive the assets held in trust. When you create a trust, you determine how the funds inside your trust will be used, and when they will be dispersed. For example, you may want to use assets in your trust to jump-start your children’s careers when they’re 25. Or supplement their retirement when they turn 60.
Or pay college tuition expenses for your grandchildren. Or provide annual scholarships to your alma mater. Your appointed trustee ensures everything is managed according to your instructions. It’s important to know there are different kinds of trusts for different purposes. Some are designed to manage who receives your assets, and when. Others may offer tax planning benefits. Make sure you work with financial experts so that your trusts are properly structured to carry out your specific intentions. Trusts can offer you and your family many financial advantages. Talk with your advisor and an estate planning attorney. Find out how trusts can help you create a lasting legacy for those you love the most.
How to Handle Bad Trustees- Obtaining Trust Documents
A full complete set of the trust and will documents that your parents signed during their lifetimes this is important because many of the previous trusts or wills that your parents have can show an intent on their part that all of their assets be distributed equally between all of their children and now there’s a final trust or will which we sometimes call the restated trust.
Well that may be disinherit you or disinherits you and other members of your family in cases like that we want to make sure we’re getting all the trust documents the problem is the way the California Probate Code section is set up on this.
The trustee is only required to give you that most final trust if it’s a restated trust on 60 days after your parents date of death well we want to see all of those documents and so there’s two ways to do this and the first way is the easy way second way is the hard way.
Let’s talk about the easy way first the easy way is simply to hire a lawyer have that lawyer write a letter to the trustee and hopefully the trustee has a lawyer as well and say hey give us all the documents in most cases the lawyer you’re the trustees lawyer will say fine send over all the documents.
So we can take a look at those but if they’re worried because they know that they got mom and dad to change the trust documents they are gonna tell their lawyer the trustee is gonna say don’t send those documents over and when that happens we know that there may be something more to the story and.
So that’s where the heart of option comes in and that’s where we have to file a petition with the probate court and then we’re able to access those other documents through discovery perhaps we can subpoena the drafting attorneys if there’s more than one attorney to get their file to show that mom and dad truly intended that all their assets would go equally between all of the siblings and, that we can use as evidence at a future trial to prove that you’re the trustee in this case if it’s a brother or sister exercise undoing it’s over one or both of your parents.
Trustees – individual or corporate
Individual or corporate When you set up your Self-managed super funds (SMSF), you need to decide on the type of trustee for your fund. Your fund can either have individual trustees; or a company as the trustee of the fund. Whichever choice you make, each SMSF member must play an active role in managing the SMSF because:
- With individual trustees, all members must be trustees
- And with a corporate trustee, all members must be directors of the company.
So which type of trustee will suit you best? Let’s have a look at some of the differences: If you are the only member of your fund – you still need two individual trustees – so you plus one other person who is willing to be a trustee and not a member. If you have a corporate trustee – you can be the single member and the sole director of the company.
Ownership of fund assets must be recorded in the name of all trustees on behalf of the fund. For individual trustees – every trustee’s name must be listed. So if a member leaves or joins the Self-managed super funds (SMSF), you’ll have to change the ownership documents. For a corporate trustee – only the company name is listed – so even if there is a change in SMSF members, you won’t have to change the ownership documents. Whichever way you go – there are costs and fees involved in setting up an SMSF. It may cost a bit more to set up a corporate trustee but, that might be a small price to pay compared to the cost and effort involved in changing ownership documents. If your SMSF breaks the super rules – each trustee can be fined thousands of dollars.
If you have individual trustees, this will cost more in fines because each individual trustee is fined the penalty. If you have a corporate trustee, it only receives one penalty and the directors share the cost between them. It’s a good idea to discuss the advantages and disadvantages of both types of trustee structures with your SMSF adviser before you establish your Self-managed super funds (SMSF).