Wills and Estate Planning

Review of Trustee’s Duties

Review of Trustee’s Duties

Now that you are a trustee, just what are your duties? This is a question that is frequently asked and often times a topic of our monthly seminars. What follows is a brief outline of your role as a trustee and we hope that it is helpful for all. A breach of trust is a violation by the trustee of any duty that the trustee owes a beneficiary. It can be an intentional breach or breach by negligence. Even in the absence of negligence, a breach of trust may occur when the trustee mistakenly interprets the trust instrument or trust law as authorizing an act that the court determines is not in fact authorized. The good news is that if in doubt, the trustee can gain a measure of protection by applying to the court for instructions. The extent of the trustee’s duties and powers is determined by the trust instrument. The trustee has a duty to administer the trust according to the terms of the trust and, when not inconsistent, trust law. To comply with trust terms, the trustee must understand them, even if it may not be a simple matter. The courts usually interpret the trust by discerning the intention of the settlor. Unusual circumstances may arise that justify a deviation from the trust. The trustee has a duty always to consider and act in the best interests of the trust; the trustee may not seek any advantage from a beneficiary; nor may the trustee wield power for the trustee’s preference to the detriment of the beneficiary. A trustee has a basic fiduciary duty to avoid conflicts of interest; the public policy is to reduce the likelihood that trustees will actually breach the duty of loyalty by requiring them to avoid situations that might temp them to do so. The trustee has a duty to deal impartially with all beneficiaries of a trust and must act impartially in investing and managing a trust property, while at the same time considering the differing interests of the beneficiaries. It is the trustee’s duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration. The trustee is also under the common-law duty to fully disclose all material facts. When there is the duty to disclose, the disclosure must be full and complete. The trustee has a duty to render personal service and not to delegate...

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FDIC Insured Accounts Titled in Your Living Trust

FDIC Insured Accounts Titled in Your Living Trust

We have had many requests regarding this topic. Therefore, please review the following information regarding FDIC insured accounts titled under your living trust. The Federal Deposit Insurance Corporation (FDIC) insures deposits at banks and savings associations that are FDIC members for up to $250,000 per account catagory per institution. This is an increase from the basic limit on federal deposit insurance coverage of $100,000. The increase is only temporary and the basic FDIC insurance limit is scheduled to return to $100,000 on January 1, 2010. (However, not all deposit accounts will revert back to $100,000 of insurance coverage in 2010. Certain retirement accounts will continue to be protected up to $250,000 because that is the permanent level previously set by Congress). Deposits include checking and savings accounts, retirement accounts (including IRAs and Keoghs), NOW accounts, and CDs. Securities, mutual funds and other such investments are not considered deposits and therefore are not covered by the FDIC When you retitle FDIC-insured accounts in the name of your Living Trust, the insurance coverage may change. In fact, your Living Trust accounts may qualify for much more FDIC insurance. The general formula the FDIC uses when determing insurance for Living Trust accounts is: (the number of Grantors living at the time the FDIC-insured institution fails) times (the number of qualifying Beneficiaries living at the time the institution fails) times $250,000. So, for example, if you and your spouse have one Living Trust together (you are Co-Grantors) and have named your two children and four grandchildren as the Beneficiaries – and certain conditions, explained below, are met – your Trust would be insured for up to $3,000,000 while everyone is living. (Two Grantors times six qualifying Beneficiaries times $250,000 = $3,000,000.) By contrast if you and your spouse had a joint account instead, it would only be insured for up to $250,000. For your Living Trust to be eligible for this additional coverage, it must meet certain conditions, which include: * The title of the account must indicate that a Trust is involved. For example, John Doe and Mary Doe, Trustees of the Doe Family Trust, dated month/day/year, Doe Family Trust, and Doe Family Revocable Trust, would all be acceptable titles. The savings institution will want a copy of the complete Trust to verify this. * A qualifying Beneficiary is not only a spouse, child or grandchild of the Grantor. Now a parent,...

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