Trustee Best Practices
What is it?
Successful trustees follow key practices: (1) Keep meticulous records of all transactions and decisions; (2) Communicate regularly with beneficiaries—transparency prevents disputes; (3) Document reasoning for discretionary decisions; (4) Get professional help for taxes, investments, and legal questions; (5) Review the trust document regularly; (6) Treat all beneficiaries fairly (not necessarily equally); (7) Never commingle trust and personal assets; (8) File required tax returns on time.
Why is it important?
Most trust disputes arise from poor communication or perceived unfairness, not actual wrongdoing. A trustee who documents decisions, explains reasoning to beneficiaries, and acts transparently will rarely face challenges. When in doubt, trustees should seek guidance from attorneys, CPAs, or financial advisors—these expenses are typically paid from the trust.
Example Language
TRUSTEE CHECKLIST: □ Separate trust bank account □ Annual accounting to beneficiaries □ Investment policy statement □ Distribution request documentation □ Tax returns filed (Form 1041 if required) □ Insurance reviewed annually □ Professional advisors retained □ Trust document reviewed for any required actions