Saturday, December 10, 2022

Manage a trust with trust between relatives

Rpe L Womenbiz 0710

My parents always tried to be fair in the treatment they gave my three sisters and me. Their reasoning was that they never wanted any of us to think there was favoritism. They loved us all equally.

Our parents reflected this in their gifts. If one of us received a new set of pencils, the rest of us would receive the same or something of equal value. This was a relatively easy task when we were little. However, later, as young teenagers, dressing in the popular styles we dreamed of became an expensive possibility. Instead, we got an annual budget for clothing: the same number of dollars for each of us.

This fair treatment had its advantages. If one sister campaigned hard enough for something, we all benefit. However, it also had its limitations. Buying four of everything could be expensive. I soon learned to get out of this confinement dynamic by working after school from the age of 13. In this way, I was able to feel a certain financial independence. (Yes, this was before the newer child labor laws.)

Many years later, when my parents thought about creating their family trust, they had this equal treatment in mind.

Since my mother was homebound at the time, I had the privilege of assisting my father with business matters and accompanying him to the trust attorney’s office to further the process. (Full disclosure: one of the other contributors to this column was our attorney.)

As expected, he described all the assets to be divided equally. However, when our esteemed legal counsel asked who wanted Dad to take on the role of trustee, he called his philosophy of fairness into play. He felt that trusting someone with his estate matters was a privilege, so he asked the lawyer if he could name his four daughters.

Fortunately, our attorney outlined some of the possible downsides to this. Making decisions together could be problematic. Philosophies on how to handle matters of trust can vary widely and, in fact, cause discord.

Soon enough, Dad recognized that he had to avoid such scenarios and appointed me trustee. As the eldest daughter, I had been groomed to take care of my sisters from a young age, and he was confident that this education would help me with everyone’s best interests in mind.

Serving as trustee has been relatively simple for me. The four sisters have a high level of trust between us. However, I have heard of other situations where siblings experienced conflict and bad feelings when one was a trustee.

How can you avoid this if you find yourself, a family member, as the trustee of the estate?

Remember that trust, even when it’s strong, needs to be nurtured to stay that way. Do not assume that because you enjoy a high level of trust and good relations with each other, you do not need to report on how the probate proceedings are going. Have a conversation with your siblings early in the administration of your trust to discuss how they would like to be informed and at what level. Remember to do this regularly.

Check in at intervals to let them know the status of any asset sales or transfers so they feel part of the process. Emotions can be a bit more sensitive during this period, as managing an estate means that someone has passed away. The loss of a loved one evokes all kinds of unfinished business as part of grieving. Unfortunately, this means that not all communication is done with a rational approach. If you, as trustee, remember to communicate regularly, it will be reassuring as other family members deal with the loss.

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