Independent Trustee Services
Role of a Trustee
A trustee of a trust is a person or entity appointed in the trust instrument to act on behalf of the trust. Trustees have the duty to administer the trust in accordance with the terms of the trust, and have certain duties and obligations as set forth in the California Probate Code.
In the case of revocable living trusts, the person or persons establishing the trust (the “settlor(s)” or “trustor(s)” often serve as the trustees of their trust, with a successor trustee or co-trustees named in the event of death or incapacity. In the case of irrevocable trusts, someone other than the settlor typically serves as the initial trustee of the trust, with a successor trustee or co-trustees named as a back-up in the trust instrument.
Many settlors name their children or family members, trusted family advisors such as an accountant or financial advisor, or a bank as successor trustee of their trust. Family members understand the family dynamics and are often more responsive than a corporate fiduciary such as a bank or trust company, but they often lack an understanding of the tax, legal, accounting and fiduciary responsibilities of serving as a trustee.
When a family member who is inexperienced in tax, legal and accounting matters is serving as a trustee, they may make a mistake or omission that could potentially jeopardize the assets of the trust and may result in personal liability to the trustee. The trust assets may be mishandled, and the trust may be depleted. Conflicts may arise between the trustee and the beneficiaries, leading to costly litigation that further depletes the resources of the trust.
Benefits of an Independent Trustee
An independent trustee may be named in the trust instrument to serve as a resource to a family member trustee, to assist in the investment process and management of the trust assets, and to ensure the trustee is fulfilling their fiduciary duties. The independent trustee should be someone who is financially savvy, with a thorough understanding of investment principles, tax implications and legal issues.
An independent trustee can also be instrumental in avoiding litigation between cotrustees who are unable to agree on a course of action or in conflicts between beneficiaries of the trust. The independent trustee can be given the authority in the trust instrument to cast the deciding vote when cotrustees are deadlocked.
Combining Legal, Financial and Taxation Experience
The attorneys at Cederborg & Bret LLP are frequently called upon to serve as independent trustees of a trust. Our attorneys have also been appointed by the court to serve in positions of trust, such as independent executor of an estate and guardian ad litem in guardianship and conservatorship proceedings. Our attorneys offer over 60 years of collective legal experience in the areas of estate planning and taxation law, and Thomas Bret is a Certified Public Accountant, Certified Financial Planner Certificant and attorney, giving him particular expertise with respect to estate, gift, and income tax issues and financial matters. For information about the Independent Trustee services offered by Cederborg & Bret LLP, please e-mail or call us at 925-947-1370.