Resolving Trustee-Beneficiary Tension Can Avoid Litigation
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In many ways, the job of a successor trustee is a difficult one. After the creator of the trust passes away, the successor’s duties and obligations begin. The trustee must manage and protect the assets of the trust while looking out for the best interests of the beneficiaries. Unfortunately, the relationship between the trustee and the beneficiaries is not always positive. There may be many potential sources of tension that exist between the parties. Consequently, understanding how to work through to a solution is crucial to avoiding litigation.
Therefore, as a trustee, it is up to you to try and set a positive tone to the relationship that you have with the trust’s beneficiaries. When tensions arise, consider taking the following steps:
Five Ways to Deal With Trustee-Beneficiary Tension
- Open the lines of communication. Requesting face-to-face meetings with beneficiaries allows you and all the other parties to share their feelings and concerns. In many cases, the lawyer assisting with the trust administration can be present to facilitate the session. In many cases, the tension between the trustee and beneficiary may derive from an unrelated personal issue.
- As a trustee, try to understand why the beneficiary is upset with your decision making. Additionally, it is important to explain to the beneficiary the factors that are driving your decisions as trustee.
- Try to make the beneficiaries feel as though they are part of the trust administration process. Even in cases where the decision isn’t what the beneficiary had hoped for, if they understands the thought process behind the choice and the way that the decision was made, it’s less likely to lead to a dispute. For example, a trustee may be struggling to balance the requirement for treating all beneficiaries equally while also meeting the specific needs of a single beneficiary. If the beneficiaries feel they are part of this decision making process, they may better understand the trustee’s ultimate decision.
- Look for compromises whenever possible. The terms of the trust do not always spell out potential solutions. For example, in situations where it would not be beneficial for one beneficiary to receive a distribution but another beneficiary is need of funds to pay a bill, the trustee could consider paying the bill directly and treating it as a loan from the trust.
- If all else fails, consider whether the trust may be better served by a different trustee. Most trusts contain provisions to allow trustees to resign and a new successor trustee to be appointed. Some trusts even allow the beneficiaries to appoint the new trustee.
The Takeaway
In conclusion, working with beneficiaries is not always an easy task for trustees. Seek an experienced legal professional for guidance. We have helped many of our previous clients successfully administer trusts. Read some of our client testimonials today on our website.