Ask The Lawyer: How much work is a trustee supposed to do?
TO BE A TRUSTEE OR NOT TO BE? ANSWER DEPENDS ON TRUST – AND YOU
QUESTION: My father, a retired French professor, wants to set up a trust that will pay for each of his 21 grandchildren (now ages 2 to 23) to spend a semester in Paris when they are of college age (or older). He has asked me to be trustee. I’m honored, but I’m also very busy – how much work is a trustee supposed to do?
ANSWER: A trustee has many responsibilities; the amount of time and effort a trustee must expend depends on the nature of the trust assets, the size of the trust, and the purpose of the trust. Michigan law sets out the duties of a trustee in MCL 700.7801 to 700.7821.
Among the requirements are that a trustee administer the trust “in good faith,” in accordance with its terms and “for the benefit of the trust beneficiaries.” MCL 700.7801. The trustee must treat the property “as would a prudent person in dealing with the property of another” – which includes investment of the trust property. The trustee must take reasonable steps to take control of and protect the trust property. For example, if the trust property is a house, the trustee would have to make sure it is maintained.
Perhaps one of the more time-consuming duties – depending on the trust – is the requirement that the trustee “inform and report,” to keep all qualified trust beneficiaries (in your case, the grandchildren), reasonably informed about the administration of the trust and any facts they might need in order to protect their interests. A trustee is also responsible for keeping records of his or her administration of the trust, and for ensuring that any taxes owed on the trust are paid.
If you accept the trusteeship, you may receive some compensation for all your trouble. Under MCL 700.7708, if the trust itself does not specify any compensation for the trustee a trustee is “entitled to compensation that is reasonable under the circumstances.”
If your father has not yet established the trust, he should consult an experienced attorney, to help ensure that the trust reflects is intentions, but has enough flexibility to allow for modifications, if necessary.
The lawyers at GWINN LEGAL PLLC are experienced attorneys and are happy to answer your questions. Give us a call for a free initial telephone consultation about your legal needs. For consideration of your questions in our web column, please submit your inquiry on the “Contact Us” page of our website at www.gwinnlegal.com.
Information provided on “Ask the Lawyer” is current as of the date of publication. Laws and their interpretation are subject to change. The material provided through “Ask the Lawyer” is informational only; it should not be considered legal advice. Submitting a question to “Ask the Lawyer” does not create an attorney-client relationship between the person submitting the question and GWINN LEGAL PLLC. To view previous columns, please visit our website.
ASK THE LAWYER
By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law
GWINN LEGAL PLLC
901 Wilshire Drive, Suite 550
Troy, MI 48084
(248) 247-3300
(248) 247-3310 facsimile
[email protected]
www.gwinnlegal.com
