Law Office of Rick Todd Blog

Wednesday, May 24, 2017

Trust Administration Problems

Here in my office in Columbia, Howard County, Maryland, I have been asked on occasion about some of issues facing trust administration. Trust administration is necessary for those who wish to avoid probate or who have young children. I’m not going to discuss trust types for this blog entry. I’m going to stick to trust administration solely because it is an issue that often overlooked when clients decide they need to draft a trust.

Perhaps the biggest issue is with the trustee’s competence. If a trustee is too old, too ill, or simply too dumb, they will not make a good trustee choice. The role of trustee is more demanding than the role of personal representative (executor) because the role of trustee can last for years and years. That requires patience and diligence. Choosing the wrong trustee can be disastrous.  

Trustees need to also be honest. A trustee has fiduciary duty to not engage in “self-dealing”, which is a nice legal term that means stealing. A trustee who gives to himself instead of the beneficiaries could find himself in a lot of trouble. Again this goes back to the grantor of the trust picking someone competent.

Another issue with trusts is the fact that there isn’t judicial oversight until a lawsuit has been filed in circuit court. This is different for a will in probate, which would have judicial oversight with the Orphan’s Court in Ellicott City. In all litigation matters, costs are extremely important. The lower the court, the less money that is spent generally, and the more “laid back” atmosphere. A court where everything is laid back means that someone can represent themselves and find judges who are willing to listen, sort of like going to small-claims court. Higher courts demand attorney representation, though the rules may suggest otherwise.  Representation costs money.

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The Law Offices of Rick Todd has offices located in Columbia, Chevy Chase, Fairfax, Virginia, and Maryland and serves clients throughout Clarksville, Columbia, Ellicott City, Fulton, Rockville, Bethesda, Potomac, Laurel, Howard County, Montgomery County, and Washington D.C.

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