Alas, after much time had elapsed, Heather took some time off from playing with Bil to resign so I could begin the transfer to a professional Trustee that will cost me about $1,500 hundred dollars. They will be charging me $75 n hour. Heather wanted to make sure she got paid for the bother.
“Heather asked if the charges for mailing the accounting, receipts and resignation could be charged to the trust and I told her those costs could. Additionally, she had to pay a notary to notarize her signature and reimbursed herself for this cost. She has detailed in the accounting any reimbursement she received for her time and I requested that she provide us with a log of her time spent managing the trust.”
“Payment of Fees for Trustee Services. Heather paid herself $310.00 for her hours on June 14, 2011; $275.00 on July 11, 2011; $108.33 through end of July, 2011; $52.00 for August, September & October 2011; $40.00 January 2012; $170.00 February through May 2012. Total she received $955.33 for her management of the Trust. A log of her hours is included in the scanned and attached materials.”
As my attorney has written in several e-mails, Heather Hanson was late doing many things as Trustee, including, dropping out. This has cost me money. When I called her to send me a statement, she did not return my calls. This prompted Bill Cornwell to call me for the first time since we met and inform me I was about to lose my daughter and grandson – because of a Trust matter!
Bill told me he was with Heather at the racetrack where he races his car, when I called. He told me Heather was shaking because I traumatized her. Only Heather’s feeling count. We had a conversation a week earlier where I asked her why she had no time to return my calls, after all she cleaned her brother’s house on Friday for $20 dollars an hour.
I now wonder if Heather is working off a loan. Heather was in debt and owed people money. You would think Bill would let her answer my calls so some of my grandson’s needs would be met. When Bill said I ruined Tyler’s trip because I got tired, I began to suspect there was another motive for Bill not wanting my family to communicate with me. Heather told me right after she met him that Bill was uttelry ignoring his disabled mother who called him all the time because she had not one else to help her.
Did Bill Cornwell hinder Heather from paying off her debts to creditors? Did Bill suggest my daughter put off paying her debts in order to live the party lifestyle that Bill is accustomed to? If so, then Bill Cornwell is interfering and dimnisioning the basic care and wellbeing of my grandson, Tyler Hunt. He is also making my daughter and grandson more dependant on him for their wellbeing because he moved them into his house.
With the use of the term “parasite” it is apparent that Bill’s radical political beliefs have been introduced into family matters, including the common care of my grandson. Politics and Family as a rule – don’t mix – because it drives a wedge between family members. Bill is not married to my daughter, and thus was not a member of my or Tyler Hunt’s family when he became divisive. Members of my family are concerned about the well being of their blood kin. In these hard times, a child needs all the loyalty he or she can get from family members. It appears Bill Cornwell has put himself in charge of Family Loyalty to the detriment of my grandson and daughter whose reputation has been severely damaged in regards to being utterly disloyal to me as a daughter, and as a Trustee of legacy a well respected uncle left me and many members of my, and Tyler Hunt’s family.
If Bill Cornwell would have allowed my daughter to perform her duties as a Trustee, then the stock of my daughter would have risen, this loyalty to true family members looking good on her reseme. Instead, Bill has encouraged my daughter to look bad in the eyes of family members, and concerned outsiders who depend on the idea of Trust, Trustee, and loyalty to function in a sane and sound society.
I go public with these matters of trust for the well being of my grandson. I can not approve of my daughter marrying, or having a child by Bill Cornwell. I have no trust he has my families best interests at heart. Indeed, he encouraged my daughter to do severe damage to her reputation any father would safeguard. However, all children must own some loyaty to their parents, and not betray them, especially when it comes to signed and notorized agreements.
Trust: What’s in a word?
The word “trust” has several meanings but at the core of all its definitions is one concept – loyalty. And loyalty is very strong in the trust law setting. Historically, trust law in the United States has its roots in the Statute of Uses – an English law enacted in 1535 to end landholders’ practice of being disloyal to their lords, who were allowing them to use their properties. Landholders were disloyal to their lords even though they were usually family members, related to their lords by blood or marriage. Today, the subject matter of trust law can be divided into two main areas: creation and administration
1. Fees. Trustees are entitled to reasonable fees for their services. Family members often do not accept fees, though that can depend on the work involved in a particular case, the relationship of the family member, and whether the family member trustee has been chosen due to his or her professional expertise. Determining what is reasonable can be difficult. Banks, trust companies, and law firms typically charge a percentage of the funds under management. Others may charge for their time. In general, what’s reasonable depends on the work involved, the amount of funds in the trust, other expenses paid out by the trust, the professional experience of the trustee, and the overall expenses for administering the trust. For instance, if the trustee has hired an outside firm for investment purposes, that expense would argue for the trustee taking a somewhat smaller fee. In any case, it makes sense to consult with a professional experienced with trust work who can guide you on what would be normal fees considering all of the circumstances.
In short, acting as trustee gives you a wonderful opportunity to provide a great service to the trust’s beneficiaries. The work can be very gratifying. Just keep an eye on the responsibilities described above to make sure everything is in order so no one has grounds to question your actions at a later date.
FAMILY MEMBER TRUSTEES
Family members such as spouses and children are frequently named as trustees, but this selection occasionally results in trouble down the road due to sibling rivaliries and the trustee’s lack of knowledge and experience.
Advantages of family member trustees include a familiarity with the beneficiaries, and possibly the trust property as well; and a common willingness to serve with little or no compensation.
Disadvantages of family member trustees include an inability or disinclination to carry out the duties of a trustee; favoritism or unfairness toward certain beneficiaries; the need for a successor trustee at the resignation, incapacity, or death of the trustee; the lack of insurance coverage in case of liability; and tax consequences if the trustee is also a beneficiary.
Institutional trustees include such entities as banks and trust companies, which have their pros and cons as well.
Advantages of institutional trustees include expertise and competence at carrying out trustee duties, such as adherence to the prudent investor rule; impartiality with regard to trust property and beneficiaries; avoidance of the problem of successor trustees; the possibility of additional services such as tax reporting or money management; and sufficient insurance coverage in case of liability.
Family Member Trustees vs. Institutional Trustees
April 10, 2011 by Matt House
When a trust is formed, one of the many decisions that must be made by the “settlor” (the one who forms the trust) is who will serve as trustee. The settlor may also select multiple trustees (“co-trustees,” who serve with each other) and later (“successor”) trustees (who may serve after the original trustee can no longer serve [death, disability, etc.] or for some other reason [resignation, removal, etc. of the original trustee].
The selection of trustee is an important one because they have a fiduciary obligation to carry out the terms of the trust and the desires of the settlor. Because the trustee exercises great power and discretion over money and property, the pros and cons of family member trustees vs institutional trustees should be considered. Trust disputes often relate back to whom, and how, was selected to serve as trustee.
Duty to administer trust according to its terms
When a trustee accepts this position, he or she is obligated to carry out the settlor’s intentions, as stipulated in the trust agreement. As mentioned in the last section, the trustee can delegate some of the duties to others; however, the trustee is still personally responsible for the administration of the trust assets and must therefore use care when delegating duties to others.
Traditionally, a trustee had more latitude in delegating routine “ministerial” functions of the trust, while personally performing duties that involved using decision-making skills—discretionary functions. In determining the acts which a trustee may properly delegate, some of the relevant factors are:
the amount of discretion involved;
value of the property;
whether the act is related to principal or income;
the remoteness of the subject matter of the trusts; and
whether the act involves professional skill possessed by the trustee herself.
Today, given that one of the trustee’s functions is ensuring that the trust assets are productive, it would be reasonable for the trustee to consult with qualified investment professionals for advice on the best course to take.
Regardless of which type of functions the trustee may decide to delegate, she must monitor and supervise the conduct of these agents, in keeping with her ultimate obligation of safeguarding the beneficiaries’ interests, which cannot be delegated. If the trustee merely accepts outside advice without diligently evaluating its suitability for the trust’s beneficiaries, the trustee faces being liable for breach of trust and any losses attributable to this lapse in judgment. See, e.g., Shriners’ Hospitals for Crippled Children v. Gardiner, 733 P.2d 1110 (Ariz. 1987).
Example: Jordan was the trustee of a trust fund to benefit his late brother’s children. In addition, he worked long hours as an accounting professor at a local community college. Plus, he had a wife and children of his own. One of his students was a stock market enthusiast. Therefore, Jordan felt comfortable letting the student pick stocks in which he would invest the trust fund assets. He did not have the time to investigate the track record of these stocks himself. Rather, he blindly invested the trust’s funds in these stocks. This type of delegation is improper and would constitute a breach of trust. Jordan has an affirmative duty to prudently invest the trust assets. That obligation can only be fulfilled if he takes an active part in the selection of the investments. As such, if any of these investments yield a loss for the trust fund, Jordan would be personally liable to the beneficiaries. See, e.g., Meck v. Behrens, 252 P. 91 (Wash. 1927).
On the other hand, if the trustee properly delegates a trustee function, there is no personal liability, provided the trustee used reasonable care in deciding to make the delegation and in selecting, instructing and supervising the agent. Instead, if the agent is guilty of some misconduct, such as negligence or dishonesty, only the agent would be liable.
When there is more than one trustee, each co-trustee is responsible for all functions in the administration of the entire trust and each must use reasonable care to prevent any co-trustee from breaching the trust.
Example: Jordan and hk the residence. Since one of Gianni’s neighbors was an insurance agent, he ofls or preservation of the trust corpus) should be paid from the capital account.
kis sister Veronica are trustees of a trust fund to benefit their late brother’s children. Jordan works as an accounting and finance professor at a local community college and is married with three children. Veronica is a nurse and a single mother of two children. Given Jordan’s expertise in accounting and finance, she passively allows him to make all the investment decisions for the trust assets. Despite Jordan’s superior knowledge of accounting and finance, Veronica’s complete deference to Jordan’s more sophisticated knowledge of the stock market amounts to a complete abandonment of her duties as a co-trustee. Except in an emergency or some other special circumstance, delegation to a co-trustee is permissible only to the extent that it would be permitted to an agent. As such, both were culpable in breaching the trust: Veronica for shirking her duties and Jordan for allowing her to coast. See, e.g., Caldwell v. Graham, 80 A. 839 (Md. 1911).
Standard of care, skill and caution
Generally, a trustee must exercise that degree of care, skill and caution that a reasonably prudent person would exercise in dealing with her own property. A trustee’s personal deficiencies will not reduce the minimum degree of skill required. Touting the fact that the trustee relied on expert advice is not an automatic panacea for this requirement. Rather, courts view expert advice as only persuasive, not conclusive, in justifying an investment decision gone awry.
Conversely, if the trustee possesses some special skill, the degree of skill required to be exercised by the trustee will be elevated to this superior level. This is particularly true for professional fiduciaries, such as trust companies or banks. They are held to a higher standard than the lay trustee. See, e.g., Estate of Beach v. Carter, 15 Cal. 3d 623 (1975).
Duty of loyalty to beneficiaries
The trustee is under a duty of absolute loyalty to the beneficiaries. As previously mentioned the trustee must put the beneficiaries’ interests before her own and administer the trust solely for their benefit. As such, the trustee must not undertake any transaction that would be adverse to the beneficiaries’ interests, especially avoiding any self-dealing.
Example: In addition to being a trustee for his late aunt’s trust fund, Gianni sold real estate. One of the assets in the trust was his aunt’s former residence. Since the real estate market was heating up, Gianni decided to sell the residence, handling the listing himself. When the home sold several months later, Gianni pocketed the 6% commission. Unless authorized by a trust provision, court order or consent of all the beneficiaries, it is a violation of the trustee’s duty of loyalty to the beneficiaries to engage personally in any financial transaction involving trust property. Here, Gianni clearly breached this duty when he sold the home and took the commission from the proceeds. See, e.g., Broder v. Conclin, 121 Cal. 282 (1898).
Another act that has an appearance of self-dealing, thereby violating the trustee’s fiduciary duties, is when the trustee accepts compensation, such as a bonus or commission, from a third party for an act done in the administration of the trust.
Example: Gianni is the trustee for his late aunt’s trust fund. One of the assets in the trust is a personal residence. One of Gianni’s duties is to safeguard trust property, so he shopped around for the best price for a homeowner’s policy on
fered him a very good price and a commission in appreciation of the business. By accepting this commission, Gianni violated his fiduciary duty to the trust.
Duty to secure and safeguard trust estate
After accepting the appointment as trustee, the trustee has a duty to take and keep control of the trust property in accordance with the terms of the trust agreement. This process involves collecting any land, tangible personal property and documents associated with intangibles, such as stock certificates. Accompanying this duty to collect trust assets is a duty to enforce all rights or claims of the trust against third parties. If the trustee delays taking control of the assets, any resulting loss will be chargeable to the trustee personally. See, e.g., Kline’s Estate, 124 A. 280 (Pa. 1924).
In addition, the trustee must exercise reasonable care in safeguarding the assets collected. If the trustee is derelict in her duties, she can be held personally liable for any losses.
Example: Tina is the trustee of her late sister’s trust fund. Before depositing the funds ($50,000) into a bank account, she diligently investigated several federally insured banks in the area. Subsequently, the bank she chose became insolvent. Due to Tina’s exercise of reasonable care in picking the bank, she did not breach her fiduciary duty and would not be personally liable for any loss. See, e.g., King v. Porter, 160 So. 101 (Ala. 1935).
Duty to segregate and identify assets
The trustee is required to keep trust assets separate from her own assets and earmark them as specifically associated with the trust. If the trustee fails to undertake these steps, the trustee will be absolutely liable (i.e., even without fault or negligence) for any loss the property might sustain.
Example: Tina is the trustee of her late sister’s trust fund. Since she was very busy at work, Tina did not have the time to diligently investigate where she should deposit the funds. As a temporary measure, she deposited the $50,000 trust assets into her savings account without disclosure of her fiduciary relationship to the money. Subsequently, the bank fails. Tina learns at that time that the bank was not federally insured. As such, the funds are lost. Due to Tina’s breach of fiduciary duty, she is personally liable for the loss, even if the loss was not Tina’s fault.