So you’ve been named trustee, now what?
Part 2
Step One: Obtain a copy of the trust and read it.
While this might sound silly to the newcomer, many successor trustees do not read the document or read only part of it, relying on others to tell them what is in the trust. It is imperative that you read the trust and understand its instructions. The trustee or co-trustees (and only the trustees) have a legal obligation for all the assets in the trust, managing those assets, and distributing the assets per the instructions of the trust.
Take your time to read the trust, note anything that does not make sense as there will be many legalese terms that most likely will be unfamiliar.
Find out when was the latest amendment to the trust and make sure you have a copy of the latest version with the latest changes. The date of the trust will impact the ease, or not, of administering the trust. Laws and general practices evolve with time. The older the trust, the more complex administering the trust will be.
Find the list of beneficiaries, which might be family members, friends, and also non-profit organizations, maybe even the family pet. The list should explain what allotment of assets each beneficiary must receive. The list might be only a few to a large list. We have noticed that the more beneficiaries, the more complicated administering the trust could be.
FPO #1 - Fun notes on beneficiaries.
Here's a little chuckle for you. This is a true story. I sent this email out to my professional group, PFAC, to ask if anyone else received a call like this...
I had a very strange call today and want to know if anyone has been contacted by this person or knows what possible scam it might be.
A woman called saying she had no “human kids” and wants to leave her and her partner’s estate to 3 stuffed animals. I laughed when she first said that and kept wondering if this was someone I knew playing a joke. The call went on for 15 minutes, and she kept her story the whole time. At first, I didn’t realize she meant stuffed animals, thinking the three were live animals. It came out in the conversation she wanted to give her estate to the stuffed animals.
Her intention: have the trustee sell two properties, then buy a tiny house or condo overlooking water for the 3 stuffed animals to live in, and have the trust manage the tiny house with the 3 stuffed animals in it.
It’s kind of funny, but she never broke into a laugh or chuckle. She played it straight the whole time.
People will do all sorts of crazy things. You might recall Leona Helmsly, the billionaire New Yorker who left $12 million to her dog upon her death in 2007. Turns out, her disinherited grandchildren sued, so the dog's "take" was dropped to $2 million. Thus, even though the trust was probably irrevocable, the courts allowed a modification. It takes all kinds, as they say.
On a serious note, the trust defines who are the beneficiaries and what they are to receive. We have heard more than once that:
"(fill in the family member) wanted me to have (fill in the asset - everything, the house, $50 million)."
However, the trust instrument dictates who gets what. Regardless of what mom told you, the signed trust is the defining document. In a case of two siblings, mom's trust clearly stated that the assets were to be split 50/50. One sibling said that mom wanted her to have everything, but because there was no signed amendment, 50/50 ruled.