Zach Wiegand

When establishing a trust, you
need to give serious thought to choosing your successor trustee—the person who
will administer your trust once you’re no longer able to do so. This individual
ideally should be:

  • Someone you trust implicitly.
  • Someone who is organized, responsible and meticulous.
  • Someone who can remain steadfast to your wishes in the
    face of family disagreements and other disputes regarding the trust.

That said, even the most capable, well-intentioned successor
trustees can make mistakes when managing affairs. Here are five surprisingly
common mistakes along with steps to take to prevent them from happening.

1. Faulty
Record-keeping

To ensure that a trust fulfills its purpose without being
contested, the trustee must keep accurate, detailed records of income and
distributions. Your trustee must also be prepared to report these figures
regularly to the beneficiaries and heirs. If these records are incomplete or inaccurate,
the door is opened for someone to challenge the trust, potentially leading to
lengthy and costly court battles.

To prevent this mistake: Hire
an accountant to assist the successor trustee in record-keeping, and make sure
the trustee and the accountant make a connection before the trustee takes over.

2. Misunderstanding
the Fiduciary Role

Many trustees mistakenly assume their job involves acting in
the best interests of the person setting up the trust. In reality, their job is
to act in the interests of the beneficiaries
of the trust. Furthermore, the trustee may be legally liable for any failure to
protect the beneficiaries against bad investment advice concerning the trust.

To prevent this mistake:
Detail the fiduciary role of the successor trustee in the trust documentation
itself, and be certain that the trustee understands his/her role.

3. Not Collaborating
Effectively with Your Established Financial Team

The successor trustee’s failure to communicate with key
members of your team while administering your trust can lead to inaccuracies,
misunderstandings and significant, preventable financial losses.

To prevent this mistake:
Make sure your trustee is properly introduced to, and connected with, your
attorney, CPA, financial planner and anyone else involved with your estate
planning.

4. Failing to Discuss
Compensation

If your appointed trustee is a close friend or family
member, the topic of compensating the trustee may be glossed over or forgotten.
This oversight can result in a lack of morale or even resentment if managing
the trust becomes difficult or time consuming.

To prevent this mistake:
Bring up the topic of compensation yourself when you establish the arrangement;
be as generous as you deem necessary; and put the compensation terms in
writing.

5. Failing to Remain
Objective

Many people choose a close family member as a trustee. This
strategy can be appropriate, especially when privacy matters. However, disputes
about money can happen even in the tightest-knit families, and it can be
difficult to near-impossible for a relative to remain neutral when resolving
those fights. The end result could be decisions that family members perceive to
be unfair or that wind up being inconsistent with your intentions.

To prevent this mistake:
Make certain the person you choose can remain neutral and faithful to the terms
of the trust, even under duress. If there is any doubt, consider hiring a
corporate trustee with no emotional connection to the family or estate.

Selecting a successor trustee is one of the most important
decisions you will make during your estate planning process. For insightful
counsel on this issue, contact us today to schedule a private appointment.

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Zach Wiegand is a Minnesota
probate attorney and estate planning attorney and the owner of Gold Leaf Estate
Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that also
handles probate and trust administration in Minnesota. We serve the Twin Cities
metropolitan area with a focus on estate planning for clients in Burnsville,
Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie and the South
Metro as well as clients in Woodbury, Lake Elmo, Maplewood, Oakdale, St. Paul
and the East Metro. Our firm has offices in both Burnsville and Woodbury (Lake
Elmo). The firm also handles probate in Dakota County, Washington County, Scott
County, Hennepin County, and Ramsey County and most other counties in the Twin
Cities Metro area. Zach has been named a Minnesota Super Lawyer – Rising Star
for 2017, 2018, and 2019, and he is a member of WealthCounsel – a national
organization of estate planning attorneys dedicated to practice excellence. You
can contact Zach via e-mail at zach@goldleafestateplanning.com or by calling
(952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000
County Road 42 W., Suite 310, Burnsville, MN 55337 and in Woodbury/Lake Elmo at
8653 Eagle Point Boulevard, Lake Elmo, MN 55042.