6 Tips Family Trustees Should Follow

People should think twice before getting involved with serving as a trustee for friends or family.  The role of trustee can be a thankless position that carries with it many fiduciary responsibilities and risk of personal liability.  If a person is thinking about being a family trustee they should understand these six tips:

1. Consider seeking professional help with trust management. If a trustee lacks the expertise needed to perform certain trust functions they may be able to use trust assets to pay for professional assistance.
2. Impartiality is a must.  A trustee has a fiduciary responsibility to put the welfare of the beneficiaries first and to be impartial. 
3. Be careful about investing. A trustee must be reasonably prudent when investing and has a legal obligation to invest in a diversified portfolio.  There may be an exception when family wealth is concentrated in a particular piece of property.
4. Personal liability is a risk.  A trustee could be at risk of being sued, they should use caution and document all decisions.
5. The experience will probably not be pleasant.  The role of trustee can be a stressful thankless responsibility that involves a lot of work. 
6. Make sure there is a way out. If the pressures of being trustee become too much to bear there should be a mechanism in place for resigning. 

See Deborah L. Jacobs, 6 Tips for Family Trustees, Morningstar, June 28, 2015.