Avoiding Conflict Between Trustees and Beneficiaries


No Unfinished Business Podcast Ep. 11: Avoiding Conflict Between Trustees and Beneficiaries w/ Chris Burt

Trustees and fiduciaries can find themselves at odds with the beneficiaries of the trusts they service. What are the keys to avoiding conflict between these two parties?

 


 

Improving the Trustee/Beneficiary Dynamic

Do you have a client who’s a beneficiary of a trust? Are you or your client a current or future trustee? Are you a fiduciary who’s dealt with beneficiaries of all sorts?

Our guest, Chris Burt, attorney and Shareholder at BoyarMiller, joins us to deliver some great tips on avoiding the pitfalls that lead to conflict in a trustee/beneficiary relationship. Chris has years of experience in this field, and has broken down tips for improving this dynamic on both sides.

Keys to Success

Unsurprisingly, the keys to success here are communication and transparency. Let’s detail it a bit further.

Here are some things that trustees need to think about:

  • Most importantly, you need to communicate with beneficiaries. It doesn’t need to be a full accounting of the trust with down to the penny info, but if the beneficiary is in the dark, they’re going to assume the worst and fill in the blanks themselves. You can avoid this!
  • Explain what “accounting” means for a trust and how it differs from a typical understanding.
  • When fiduciaries are drafting trusts, include periodic updates to beneficiary and a built-in grievance period for beneficiaries, so things don’t fester.

What beneficiaries can do:

  • Ask lots of questions! Automatic info may not come to you and you often need to ask. The trustee/fiduciary is there to answer.
  • That said, you should also know when to stay in your lane and what to consider when choosing a trustee. Sometimes neutrality trumps familiarity.
  • Keep assets as separated as possible to avoid conflict. Fights are expensive, and the trust is usually the one that ends up paying legal fees. Everyone loses.
  • How do you know when a trustee has done something wrong? Trusts with high-risk or questionable investments should get a financial planner to do an analysis. Nothing wrong with a fresh set of eyes on the portfolio. The trustee is obligated to handle the money in a prudent way.

 


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