Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.
Trusts are one of the most useful and practical estate planning tools out there. They protect trust assets against creditors, avoid probate, and guarantee assets go to where they’re supposed to after death. That said, trusts fundamentally are nothing more than legal agreements dependent on people to carry them out. Just like how a trust without funding is nothing more than an expensive stack of paper, a trust without a trustworthy and diligent trustee is nothing more than an agreement between you and nobody. Thus, picking a competent and willing trustee to carry out your trust instructions is critical, because when you are gone, you and your trust beneficiaries are almost completely at the mercy of your trustee.
The duties and obligations set upon trustees are expansive and complex, and for good reason. The potential for misbehavior and self-dealing are obvious. With little actual day-to-day oversight regarding trust property and money, volumes of cases exist of examples of trustees embezzling, concealing, or just plain stealing trust assets. Remember, reported cases only represent a faction of reality, these are only the trustees that got caught and many more got away with it. All is not lost, however, if you have doubts about what your trustee is doing. And for those appointed as trustees, the first step in avoiding trustee liability is knowing what you are actually agreeing to do when you say “yes” to becoming a trustee. The first, and often most important, duty of a trustee is to tell people what you are doing as trustee. Most conflicts regarding trusts start simply because one side doesn’t know what the other is doing. As always, when either creating a trust, appointing a trustee, or accepting a trustee appointment, consult with an experienced Cleveland estate planning attorney. A quick conversation about the do’s and don’ts can save you a lot of trouble down the road.
The Golden Rule for Trustees
Greed is a cardinal sin for a reason. Tragically, when most people are provided the means and opportunity to do the wrong thing, that’s what they do. The Ohio trust code attempts to curb the baser instincts of trustees by making them accountable for what they do. The first step in ensuring trustee accountability is mandatory reporting. Proper and timely reporting of trust assets and monies will calm any anxious settlor or beneficiaries and protect trustees from liability. Again, the vast majority of lawsuits against trustees begin due to lazy communication or incomplete trust accounting.
Per O.R.C. § 5808.13 (A):
“A trustee shall keep the current beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary’s request for information related to the administration of the trust.”
If a trustee follows any rule religiously, it should be this one. Though we all should pursue perfection in everything we do, trust beneficiaries are much more likely to be lenient with trustee mistakes if you are upfront with them and respond in a reasonable manner within a reasonable time. Though this seems like common sense, be honest and call people back, if this wasn’t a constant issue with trustees it wouldn’t be codified with the law. All trustees should speak with an Ohio estate planning attorney at least once to ensure they are following the law and providing the mandatory information. Most people aren’t familiar with managing a trust, it isn’t necessary for day-to-day living. An attorney can provide step-by-step instruction and remove the guesswork.
Additional Trustee Duties and Obligations
Naturally, the trustee duties to report and respond come with some specific jobs and obligations. Again, this is to ensure no foul play is occurring with trust assets or money but also make it easy for trustees to know what they have to do and how to protect themselves from litigation. In regards to reporting and informing, a trustee shall do all of the following:
I. Provide copies of the trust to beneficiaries when asked
Upon the request of a beneficiary, promptly furnish to the beneficiary a copy of the trust instrument. Unless the beneficiary expressly requests a copy of the entire trust instrument, the trustee may furnish to the beneficiary a copy of a redacted trust instrument that includes only those provisions of the trust instrument that the trustee determines are relevant to the beneficiary’s interest in the trust… O.R.C. § 5808.13 (B)(1).
This duty is pretty self-explanatory. Often trust beneficiaries don’t have access to trust documentation and in order to make sure their interests are being protected, they have to first know what they are by looking at the terms of the trust. As trustee, you are the holder of the trust documents and must provide copies when asked.
II. Introduce yourself as trustee to the beneficiaries
Within sixty days after accepting a trusteeship, notify the current beneficiaries of the acceptance and of the trustee’s name, address, and telephone number. O.R.C. § 5808.13 (B)(2).
This duty is common sense as well. Simply inform trust beneficiaries of who you are. Again, since you are in practical control of trust assets and money, who and where you are is important information for trust beneficiaries to know so they can protect their rights.
III. Inform trust beneficiaries of their rights
Within sixty days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, notify the current beneficiaries of the trust’s existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report… O.R.C. § 5808.13 (B)(3).
Most trust beneficiaries don’t know their rights under the trust or even basic information about the trust. As trustee, it is your duty to inform them so they can protect their rights. Seems self-evident but uncountable trustees have failed to do even this.
The reporting duties and obligations of trustees are not practically difficult but they can be time-consuming, that is why trustees get paid for their labor. Though facially simple, many trustees fail with even the most basic trustee jobs and find themselves in front of a probate judge and facing personally liability. Always consult with an experienced Cleveland estate planning attorney to remain informed of all of your trustee duties and obligations and make sure this doesn’t happen to you.
Helping You And Your Loved Ones Plan For The Future
About the author: Mike E. Benjamin, Esq.
Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.
Disclaimer:
The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.
