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When the Beneficiary and Trustee are the Same Person

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Though not the case in most instances, there are times when a trust’s beneficiary is also named the trustee. From a legal standpoint, beneficiaries are certainly eligible to serve as the trustee of an estate. However, things can get complicated in such a scenario when the time comes to carry out one’s duties as the trustee.

Here are just two aspects of serving as a sole trustee that can prove to be problematic if that person is also a beneficiary.

Fiduciary Duty

The fiduciary duty required of a trustee mandates that he considers the interests of the beneficiary above his own. Given the trustee in this instance is a beneficiary presents a conflict of interest. In a worst case scenario, the individual may use his power to serve his own interests, thus failing to carry out his legal duty. Remainder trustees, in particular, are likely to be put in an even more compromising position when fulfilling this obligation — primarily because the disbursement this individual receives from the trust comes from whatever is left over after primary beneficiaries have received their share.

Beneficiary Disputes

When a beneficiary also holds the role of trustee, it stands to reason that the other beneficiaries are likely to question his objectivity. The fact is that no matter how well this person carries out the duties of the position, the opportunity for conflict is always heightened in this kind of situation. Should such disputes require a legal recourse, the trust’s money will need to be utilized to satisfy legal fees. Therefore, the situation is likely to have a negative impact on everyone involved.

Appointing a beneficiary as a trustee can certainly present some issues. However, that’s not to say the decision is always a poor choice. Some people are simply more comfortable entrusting their assets to a person which they are close to, and reasonably so, this individual is often a consideration for a beneficiary as well. With this in mind, there are ways to lessen the chances of problems arising before the time comes to distribute assets. With the help of a Miami probate attorney, one can ensure his trust is specific in how the distribution should occur, leaving little room for confrontation. It is also worth considering a co-trustee, to make certain that a truly objective individual is involved in the decision making as well.

If you have questions about establishing a trust, our team is here to answer them. Call our office today to speak with an experienced Miami probate attorney about your unique needs.

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