FIVE TRUSTEE DUTIES IN MISSOURI
The job of a trustee, generally speaking, is to administer the trust. A trustee, in fact, has a fiduciary duty to the beneficiaries of the trust. That means they must always act in the best interests of the trust beneficiaries.
All too often, however, I encounter trustee who have been thrust in the role with no idea of what they can do (trustee powers), what they must do (trustee duties) and what they can’t do.
This article discusses five duties of trustees (not a complete list by the way) for trustees in Missouri:
#1 A TRUSTEE MUST READ THE TRUST
A common answer to the question from a trustee asking “Can I do this?” is for the attorney to reply, “Well, what does the trust say?” Too often trustees make mistakes because they don’t know if the trust allows them to take a specific action. If the trust allows action, it’s almost always permissible action to take by a trustee. So read the document and remember #2.
#2 HIRE PROFESSIONALS
I’ve read well over 1,000 trusts in my career and I can remember maybe a handful that didn’t provide that the trustee can hire professionals like accountants, financial advisors and attorneys to assist them with the various accounting, investing and legal responsibilities of serving as a trustee.
In the case where a trust lacks a provision allowing the hiring of professionals, the Missouri Trust Code does allow it under RSMo. 456.8-816(d)(25). A trustee without the requisite expertise should not be completing and filing tax returns, making legal judgments on trust issues or investing trust funds.
In all cases, they can and should hire the right professional to assist them.
#3 BE LOYAL, BE IMPARTIAL AND ACT PRUDENTLY
Trustees can get in trouble (and can be removed as trustee) for self-dealing, preferring one beneficiary over others or failing to act. You may like one beneficiary more than another, but you can’t administer the trust in such a way that such a preference is obvious. A trustee also shouldn’t self-deal, i.e. selling trust property to a spouse for less than fair market value, taking trust funds and using trust funds inappropriately.
#4 KEEP GOOD RECORDS
Another common no-no committed by trustees is poor record keeping. As a trust lawyer Maryland Heights, Missouri, I commonly see trustees who claim trust expenses were paid but they don’t have any proof of the payment, such as an invoice or a receipt. Often there is nothing improper going on, but it doesn’t look that way because of the lack of supporting documents for trust expenditures. For less than $15, a trustee can buy an accordion file to hold bank statements, receipts and invoices by month. In other words, not keeping good records is inexcusable.
#5 KEEP BENEFICIARIES INFORMED AND RESPOND TO INQUIRIES
It’s not uncommon for beneficiaries of a trust to call me complaining that a trustee will not return their calls or respond to requests for information. I then have to write a letter formally asking for a response on behalf of the beneficiary. Then maybe a few weeks later, I get a letter from a lawyer hired by the trustee explaining what’s going on. Simply stated, nothing will cause problems in the administration of a trust by a trustee more than a lack of communication. A trustee who doesn’t return calls or respond to emails is assumed, usually incorrectly, to be living the good life on a Caribbean island rifling through all of the trust funds in the process. The best and most affordable way to avoid this assumption is simply to respond. Even if you don’t have an answer, you can just say you’ll get back to them with an answer.
Now, to be fair, a trustee will often encounter beneficiaries who will be unreasonable in their requests for information and can never be satisfied no matter what response the trustee gives them. In that case, it’s always better to only communicate via email so you can have a record of the beneficiaries actions in the event that you end up in court. Avoid making things personal and stick to the facts.
Serving as a trustee is the acceptance of another person’s faith in your ability to serve as a trustee. Always remember that. You were chosen for a reason. But you have a large responsibility to act in accordance with the trust terms and Missouri trust law.
Legacy Law Center assists trustees throughout St. Charles County, St. Louis County, Warren County and Lincoln County. If you’re a trustee and not sure how to administer the trust or to deal with a problem, call our firm for a FREE CONSULTATION to learn how we can help. Call us today at (636) 486-2669!