By Stacey Romberg
“A trustee shall administer the trust solely in the interests of the beneficiaries.”
Non-professional fiduciaries serving as personal representatives or trustees often assume their new duties with apprehension. How much time will it take? Will the work be difficult? What if estate heirs or trust beneficiaries start fighting?
This article offers 10 straightforward strategies to help you tackle your fiduciary duties in an efficient, legally sound and effective way.
Take Your Fiduciary Responsibilities Seriously
Washington law requires personal representatives, prior to appointment by the court, to “take an oath, … that the duties of the trust as personal representative will be performed according to law.” Similarly, RCW 11.98.078(1) provides, “A trustee shall administer the trust solely in the interests of the beneficiaries.”
Serving as a fiduciary is serious business. If you commit errors, fail to promptly fulfill your obligations or engage in inappropriate conduct, you may find yourself in court attempting to justify your misdeeds before a judge, opposing counsel, and disgruntled heirs and beneficiaries.
Keep Meticulous Records
Carefully track all financial transactions related to the estate or trust. Keep copies of all receipts, checks, bank statements, etc. Additionally, keep detailed time records, especially if you expect compensation for performing your duties.
If you serve as a personal representative, you will need to prepare an inventory of all assets owned by the decedent. You also may be required to provide a detailed accounting of all estate-related financial transactions. Similarly, as a trustee, you are required to provide detailed reports concerning trust transactions to “all persons interested in the trust.”
By understanding this obligation from the start and meticulously keeping records on an ongoing basis, you will make your job easier down the road.
Use Your Calendar
Serving as a fiduciary takes time. You can do your job more efficiently and effectively if you schedule sufficient time on a monthly basis to perform your duties. Otherwise, you may find yourself dealing with missed deadlines and those angry heirs and beneficiaries.
Communicate Proactively with Your Attorney and Accountant
Your job description includes engaging with an attorney and an accountant on an ongoing basis to make sure all legal, financial and tax requirements are being met on a timely basis. If you have questions, ask.
Seek to do it right the first time, rather than expending the time, money and needless aggravation involved in fixing errors.
Communicate Frequently with Heirs and Beneficiaries
Heirs and beneficiaries tend to be anxious. They want the money they are entitled to receive, as soon as possible. They may be nervously checking their email inboxes, voice mail and mail boxes on an ongoing basis, waiting to hear from you.
Take good care of them by initiating positive and professional, ongoing communications, developing a sense of rapport and trust. By communicating often, you maximize the likelihood that your fiduciary duties can be performed without accusations and negativity.
Minimize Opportunities for Disputes
Treat all heirs and beneficiaries in a neutral, impartial manner. Whenever possible, communicate with everyone as a group rather than individually. If you notice tensions developing, immediately inform your attorney.
Seasoned estate planning attorneys can provide guidance to resolve disputes quickly and painlessly. Washington’s Trust and Estate Dispute Resolution Act (TEDRA) offers a roadmap for minimizing the time and attorneys’ fees involved in determining disputed matters.
Set Apart Trust or Estate Assets from Your Own Assets
Never commingle trust or estate assets with your own assets. Immediately upon your appointment as a trustee or personal representative, work with your attorney to obtain a federal tax identification number for the trust or estate and open a separate bank account.
If you expend your own funds on behalf of the estate or trust, be certain you have all your receipts and can fully support any reimbursements.
Keep all trust and estate information confidential, outside of communications that further trust interests. Confidentiality is a part of your fiduciary responsibilities; careless communications can come back to haunt you.
Any transaction between you and the estate or trust, such as your purchase of real estate from the trust, is self-dealing. Consult with your attorney prior to entering into a transaction of this nature.
Review “The Fiduciary’s Handbook”
You can purchase this helpful resource for a nominal fee from the Estate Planning Council of Seattle: www.epcseattle.org.
Stacey L. Romberg, Attorney at Law, focuses her practice on estate planning, probate and business law. Reach her at: www.staceyromberg.com.
Reprinted from the King County Bar Bulletin – July 2013