A person creating a trust will appoint a person or corporation to be responsible for managing the assets. This person is known as the trustee. Complete responsibility is transferred by the grantor to this individual on the basis of the trust agreement. The purpose of this transfer of responsibility is to manage and protect the assets of the trust and eventually to distribute assets to the beneficiaries according to the grantor’s wishes.
The grantor puts a great amount of trust in a trustee, so if a grantor or beneficiary suspects that a trustee is breaching his or her duties, the beneficiary must immediately consult with an attorney. Only a legal professional is capable of assessing whether or not a trustee’s duties have been breached.
There are some specific things that cannot be done by a trustee unless expressly noted in your trust agreement:
- A trustee does not have the power to deposit the trust’s funds in a safe deposit box or a personal account.
- Investments in schemes cannot be completed by a trustee without correct documents.
- Assets of a particular trust cannot be mixed by the trustee with other assets.
- Loans cannot be made by a trustee without security or proper documents.
- Cash cannot be distributed by the trustee to a beneficiary without the proper documents.
When deciding whom to appoint as a trustee, it is important to consider the individual or corporation’s historical background in finance, how many trusts they have acted on behalf of, and their overall financial stability. An established trust corporation with a history of fiduciary capacities may be preferred to a personal friend. A trust company will know all of the rules, regulations, and ultimately may be easier to sue in the event of error or fraud. Appointing a responsible trustee is crucial to the effectiveness of a trust and overall plan for asset protection. This choice should not be taken lightly.