|In an age of e-everything, paper RULES|
Let's start with what it takes to be a good trustee from both the perspective of someone who is currently in this role and from the standpoint of someone who is setting up a trust.
#1: Fiduciary Responsibility
From the Free Online Dictionary
fiduciary 1) n. from the Latin fiducia, meaning "trust," a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another, often called the beneficiary, under circumstances which require total trust, good faith and honesty.
A fiduciary relationship encompasses the idea of faith and confidence and is generally established only when the confidence given by one person is actually accepted by the other person. Mere respect for another individual's judgment or general trust in his or her character is ordinarily insufficient for the creation of a fiduciary relationship. The duties of a fiduciary include loyalty and reasonable care of the assets within custody. All of the fiduciary's actions are performed for the advantage of the beneficiary(-ies).
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I had a conversation yesterday with the manager of the UPS store where I send faxes and get things notarized. It so happened that she had been the executor of her father's estate, and when he passed, she had to deal with probate. Trusts avoid probate altogether, so it was an interesting conversation from both sides. We compared notes and talked about our most challenging obstacles.
Hers involved fighting the probate attorney over taxes on her father's mobile home which happened to be on wheels, which makes it a vehicle, not real estate. Her father's attorney was trying to hold the estate accountable for 3 years of back property taxes. She had to prove through the DMV that the mobile home was a vehicle, then make a case to the probate judge that the estate was not responsible for paying 3 years of back property taxes.
Her father's estate attorney made the case that her father had lived in the mobile home for three years and had never driven it anywhere. It was parked in a trailer park and had been used as his primary residence. The attorney was holding to his interpretation of a permanent residence, whereas she, as executor of her father's estate, was protecting his assets and protecting the interests of the beneficiaries. The probate judge ruled in her favor.
Mine, as of this week, was untangling parking tickets that were being run up on a single license plate stolen from the front of my dad's truck on the day that he died. Someone in the neighborhood saw the commotion at the house, knew that he lived alone, and decided to take advantage of the situation.
Both of our scenarios involved the DMV. I was also dealing with the City of Las Vegas Department of Parking and Hearings, as well as Metro Police. She had to deal with the court system and go up against the attorney who had drawn up her father's will.
The primary responsibility of anyone who is in a position of administering an estate (whether it be a trust or a will) is to manage and protect the interests of both the estate and the beneficiaries. A fiduciary role is defined by a complete understanding of the intentions of the original author of the will or the trust. It is with this understanding that a good trustee or executor moves through the administrative steps that are necessary to execute the estate.
Coming up next week...Choosing the Right Trustee: #2 Organization