Why Trusts Are Difficult to Administer

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 29-30

Trusts are often long-winded instruments that are difcult for the average

individual trustee (who is not a professional) to understand. In addition,

if the trustee does not retain an accountant or an attorney who is aware

of the state trust laws, then the trustee may have a problem in adminis-

tering the trust.

Not only must a trustee read the trust instrument, he or she must

understand the document and follow its terms. If the trust instrument

provides that income must be paid out annually to the income bene-

ciary, then the trustee must determine the amount of income that must

be paid out each year.

If a trustee may, at his or her discretion, pay out income each year to a

trust income beneciary, then the trustee must exercise discretion in good

faith. In addition, the trustee must look to the terms of the trust instru-

ment for guidance in exercising the discretion that is granted to him or her.

Ultimately, the trustee must account for his or her actions with respect

to handling the affairs of the trust. Not only is the trustee responsible for

the proper handling of the investments of the trust assets, but he or she

is responsible for following the terms of the trust regarding distributions

to the income beneciary of the trust.

In addition, the trustee may be granted discretion regarding the inva-

sion of principal for the benet of the current trust income beneciary.

Once again, a good faith requirement is imposed on the trustee.

The task of acting as a trustee is not a cakewalk. It is more often than

not a headache for the nonprofessional trustee, since it is both time con-

suming and subject, in many cases, to modest trustee commissions.

Often, members of the family act as trustee without compensation.

This is a labor of love, not money.

29

WHY TRUSTS ARE DIFFICULT

TO ADMINISTER