Probate & Trust Law Section Conference Manual ... - Minnesota CLE

For the trustee: If an individual trustee has been selected, has someone, whether it be
the grantor, or perhaps more appropriately, an advisor, explained to the trustee his or
her role and the duties and powers he or she is assuming? Has there been an
assessment of whether this person is willing, and more importantly, able to fulfill that
role? Who will be responsible for helping the individual trustee develop a strategy and
process for carrying out the trustee’s duties and responsibilities? This may include
delegating certain responsibilities to other individuals or professional entities. Has there
been guidelines established for interacting with the beneficiaries? This should include
methods and frequency of communications. This may be one of the most important
and often overlooked roles that an adviser to a trustee can have. A substantial
number of disputes that arise between beneficiaries and trustees are a result of
miscommunications or no communications, and if expectations can be set forth and
agreed upon at the beginning of the relationship, it is quite possible that many of these
disputes could be avoided.
For the beneficiary: Does the beneficiary understand the concept of the trust and have
a basic understanding of why the trust was established? Does the beneficiary
appreciate the differences in certain classes of beneficiaries (i.e., income v. principal,
current v. remainder)? Does the beneficiary understand the role of the trustee and the
responsibilities that the trustee has to ALL the beneficiaries, as well as the trustee’s
responsibility to the grantor? Have the ground rules and expectations for the trustee’s
relationship with the beneficiary, including communications and meetings, been fully
disclosed and agreed to? An overriding goal of the trustee should be to help with the
financial education of the trust beneficiaries, particularly if the trust is designed to
terminate and distribute outright to the beneficiaries at some point in the future.
Beneficiaries must also be held accountable to prepare themselves to manage these
assets in the future. They should be meeting with the trustee periodically and actively
participating in these meetings. At some point, they need to also accept the
responsibility for holding the trustee accountable by monitoring the trustee’s
performance. These are vitally important issues, often overlooked by the family’s
professional and financial advisers.
Duties of the Trustee
The individual or entity accepting the role of trustee has the following duties:
I. Duty to administer the trust in accordance with the trust terms and applicable law.
This duty encompasses a number of responsibilities, including, but not limited to,
maintaining and managing trust property, appropriately accounting for trust income
and principal during the administration of the trust, filing necessary tax returns, and
distributing trust assets to beneficiaries during administration and at termination. The
trustee must fulfill these duties with care and skill while acting for the benefit of the
trust beneficiaries. The trustee has the duty to become familiar and knowledgeable
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