Problems Trust Administrators And Trustees Face

Administering a trust isn’t easy. As the administrator or trustee, it’s your job to make sure that the trust is administered the way the creator (testator) wanted them to be. But it’s also about more than that.

The trustee or administrator needs to secure the assets to the trust, and makes sure that whatever is to be distributed, gets in the hands of whomever is supposed to get it. Sometimes, that isn’t as easy as it sounds. Here are some common problems that a trust administrator may face, when administering a trust.

Vague and Ambiguous Terms

Sometimes, especially with poorly drafted trusts, a trustee doesn’t know who is supposed to get what. For example, the trust may distribute assets to a beneficiary, so long as he or she “is doing well in school, and staying out of trouble.” As you can imagine, these words leave a lot to interpretation, and have a subjective meaning that can vary.

This can lead to beneficiaries fighting or arguing, and blaming the trustee, especially when the trust gives the administrator wide discretion.

It is always best to make sure that a trust has more definite provisions but they don’t all do. This can leave a trustee to interpret terms, and often, the trustee comes in conflict with beneficiaries over interpretations.

No Beneficiary to be Found

It does happen, especially with older trusts which have never been updated, that property is supposed to go to a beneficiary, who has since disappeared, or else has passed away since the trust was created. That leaves the trust administrator in a tough spot; there are now assets to be distributed per the rules of the trust, which can’t be distributed. That may require court intervention to determine how the property gets distributed.

Dated and Irrelevant Terms

The same can happen, when a trust’s terms are no longer applicable or relevant. Imagine for example, provisions left for a pet who no longer exists at the time the trust is to be distributed, or a trust that provides educational benefits for a child who has long since graduated already. Once again there is property or assets that have nowhere to go, and the administrator has no direction as to what to do with them.

Non-divisible Property

Often, property will be left in a trust to multiple beneficiaries. The problem is that the property is not amenable to physical division, the way, say, money can just be divided. Imagine a house left to two beneficiaries, and both differ as to what to do with the house, or who will live in it. The administrator or trustee now has a problem.

Appraisal Problems

Often, an administrator needs to value assets left in a trust. While some assets are relatively easy to value—there is no shortage of experts who can value houses or businesses—other, more esoteric, rare, or subjective items (like artwork), may not be able to be easily appraised.

Trustees often need attorneys to help them administer trusts. Call the Torrance probate will and estate attorneys at Samuel Ford Law today.

Sources:

hawksford.com/insights-and-guides/trustee-challenges-in-todays-environment

legacyassuranceplan.com/articles/trusts/family-trusts-trustee-conflicts-perils-of-appointing-family-members