A trust can be a great way for you to pass on wealth to your family members, provide for loved ones with disabilities and health conditions or protect your estate. If you create one that takes effect during your lifetime – like a revocable living trust or a special needs trust – a major step in this process is selecting a trustee to manage it.
However, even though you may expect a trustee to properly handle the funds, an unfortunate reality is that they might not have the beneficiary’s best interests in mind. This is why it is important to be wary of who you select to oversee your trust.
What are some red flags in a trustee?
When you select a trustee, you give them the ability to manage and control the trust’s assets. A trustee has a duty to act in the best interest of the beneficiary. As the grantor, you also want to ensure they manage the funds wisely.
However, you may have to reconsider the trustee’s position if you notice these behaviors:
- Keeping secrets: As a trustee, you might expect them to be transparent when it comes to providing a complete and correct accounting of your trust. If they are being secretive or even dishonest when you ask for information, this may indicate that they are taking advantage of their position.
- Mismanagement: It is a trustee’s job to manage your trust’s funds, investments and distribution of assets to beneficiaries. If they are not doing this properly, they might not be qualified to administer your trust or they may be deliberately mismanaging it.
- Unfair treatment: Your trustee is responsible for distributing the trust’s funds to your beneficiaries while maintaining impartiality. If you observe that they are treating some of your beneficiaries more favorably than others, they may not be acting in their best interests.
A trustee plays an important role in ensuring the success of your estate plan. Watch out for these actions to keep your family and your estate secure.