A trust is a fiduciary relationship in which one party (the trustor) gives another party (the trustee) the right to hold title to assets or property for the benefit of a third party (the beneficiary). Given the importance of the trustee's role in the property distribution process, the law imposes several duties on those who choose to accept this responsibility. Below is an overview of the duties of trustees in Michigan. For additional information on the benefits of including a trust in your Michigan estate plan, please contact a Michigan estate planning attorney.
Michigan Trustee Duties
In Michigan, a trustee has many duties, the primary ones being:
- A trustee must carry out the trust in accordance with its terms.
- A trustee must exercise a reasonable level of care and skill when managing trust assets.
- A trustee owes the beneficiaries of the trust the highest duty of loyalty. This means that the trustee must administer the trust in the best interests of the beneficiaries. In addition, the trustee must avoid conflicts of interest at all times and make full disclosure of any potential conflicts to the beneficiaries of the trust.
- A trustee must protect and preserve trust property. He or she must also defend the beneficiaries and trust against challenges to the validity of the trust and outside claims to trust assets.
- A trustee must separate and set aside trust property and keep his or her own property separate from trust property. When a trustee mixes his or her property with trust property, he or she is liable for any resulting losses.
- A trustee must make the trust property productive, which means that he or she must act act reasonably when investing, acquiring, selling, and managing trust property. Included in this duty is the responsibility of handling tax matters for the trust. If the trustee is unfamiliar with investing, taxes, and other financial matters, he or she must consult with appropriate professionals, such as tax accountants and financial advisors, in order to make the trust property productive.
- Depending on the trust instrument's terms, a trustee may have to file a full financial accounting with the court on a regular basis. Most trustees are required to report this information annually.
Contact our Michigan estate planning attorney today
Depending on your individual circumstances, a trust may be a great option for your estate plan. However, in order to make this determination, you should discuss your estate planning needs with an experienced Michigan estate planning attorney as soon as possible. If you'd like to begin planning for your future, please contact Keating Law, PLC today for a consultation.