As a trustee or personal representative, you will be held to a high standard as you administer the trust, a standard higher than that the original owner was held to. And if you have specific knowledge (such as having owned a business before, being an attorney or CPA) you will be held to a higher standard still.
Here are three steps you can take as a trustee or personal representative that will help you better manage your responsibility as well as reduce your liability as you administer an estate or trust that has business or complex investments:
- Assemble a team. Even if you have experience with owning and operating a business or in managing an investment portfolio, you can be held accountable for making decisions that have a negative impact on the viability of the trust’s business or assets. Seek help from qualified professionals (CPA, probate attorney with experience working with businesses and other relevant advisors.)
- Delegate control. You need to find a qualified person to take responsibility or accountability for his or her actions in managing this business and operating it. That person must be committed to making the right decisions, even difficult ones such as firing family members. (This in particular is a common and difficult decision that must be made with a number of trusts.)
- Maintain communication. As personal representative or trustee, it’s your responsibility to keep beneficiaries informed of the state of the business or other assets.
Passing along the commitments and responsibilities of a business and business assets through a trust can be complicated. The trustee or personal representative who administers the estate should understand the responsibilities of the position.
Without information, knowledge and expertise needed to run a business profitably, the trustee can be held liable for a decline in the business. Assembling a team and delegating control are two critical steps a trustee should make to maintain and manage the assets. Be sure to keep the beneficiaries informed and in the loop regarding the state of affairs.
If you need help understanding the duties of a trustee and how to manage a business or other complex assets in a trust, we’d love to help.