The beneficiaries of the trust are those who enjoy the benefit of a trust’s assets. Beneficiaries may include the spouse, children, associates or other family members of the creator of the trust. Non-profit organizations, religious institutions and other charitable entities as well as businesses may also be beneficiaries. The Trustee has certain duties to all the beneficiaries of the trust, which may become more complicated when there are different classes of beneficiaries or when the trustee is also a beneficiary. One very important duty is the duty of loyalty to the trust’s beneficiaries.
The duty of loyalty means that the trustee must act within the terms of the trust itself in the best interests of the beneficiaries. For example, if the creator of the trust decides to leave his estate to several charitable institutions, the duty lies to those institutions. Even though the trustee might be an heir at law and devastated by that decision, he still must administer the trust to the benefit of the designated beneficiaries. This also means that the trustee is prohibited from using his position to benefit himself to the detriment of the trust. In this example, if the trustee is also executive director of one of the charitable institutions, he may not deplete trust assets to increase his own salary.
The job of a trustee is a very important one that carries a lot of legal responsibilities. It is crucial that a trustee fully understands those duties in order to avoid legal liability. Fortunately, there are experts who can assist trustees to properly execute his responsibilities. If you or a client needs assistance with a trust please contact Lindsay Leonard at Santa Barbara Estate Services.
