A trustee is a person who was named in a trust by the grantor of the trust to manage the assets owned by the trust. The role of trustees in Maryland is important because they have a fiduciary obligation to manage and protect the assets for the benefit of the named beneficiaries of the trust. Often times, a trustee has never served as a trustee and may seek the advice of a trust and estate lawyer to identify their duties or explain how to proceed with their duties. If this is your first time navigating this role, a distinguished trusts attorney can help you review your expectations.
Exercising the Authority of a Trustee
A trust agreement is a legal document that gives a trustee the rightful authority to act on behalf of the trust and manage the assets of the trust. Assets of the trust can include checking and savings bank accounts, investment accounts, or other financial assets. Many times the bank or financial institutions want to review portions of the trust agreement to ensure that the trustee is the current rightful agent to act on behalf of the trust.
What is the Relationship Between a Trustee and an Advisor?
A role of trustees in Maryland often includes seeking the advice of a financial advisor. When the trustee has a fiduciary obligation to manage the assets for the benefit of a beneficiary; it is wise to seek assistance from a professional who can provide financial and investment advice. A financial advisor is in the best position to provide this advice. If the trustee has not yet sought the help from a financial advisor; it is common for a trust and estate lawyer to recommend doing so.
Defined Standard of Care
The legal document for a trust agreement usually specifies the exact standard of care. Generally, the role of trustees in Maryland means having a fiduciary obligation to exercise a duty of care in managing the trust assets. Based on the trustee’s own experience and capability, this may require the trustee to seek help from professionals such as a financial advisor who can provide investment advice or a trust and estate lawyer who can provide advice regarding the trustee’s responsibilities and assistance with the administration of the trust.
An exculpatory provision is a provision that is sometimes included in a trust in order to remove liability of a trustee. This is something the grantor of the trust may want to include if they prefer that the trustee is not liable for mismanagement. However, depending on the broadness of the provision, a court may ultimately not find that the provision is binding if a trustee has breached their fiduciary obligation to the beneficiary.
Trustee Removal Process
The process of the removal of a trustee depends on the language of the trust agreement. For example, the trust may allow the trustee to withdraw for any reason. The trust may also appoint a successor trustee in the event that the first named trustee is not willing to serve as trustee or withdraws from the position. In that situation, the trustee simply withdraws and the successor trustee steps in as trustee.
The trust may also provide for the trustee to appoint a successor trustee of the original trustee’s choosing rather than naming a successor trustee in the trust agreement. The trust may also provide a way for the beneficiary to remove a trustee if a certain number of the beneficiaries agree. This may include involving the court to remove the trustee. If the court is involved, the removal of a trustee depends on whether there was a breach of the trustee’s fiduciary obligations to the beneficiary. Contact a lawyer as soon as possible to best comprehend the role of trustees in Maryland.