Naming someone as trustee is usually a sign that the person creating the trust believes that the trustee is an ethical and responsible person. They choose to put that person in a position of authority over their legacy, which might mean that they have control over hundreds of thousands of dollars in assets.
The trustee has an obligation to both the trust’s creator and its beneficiaries to follow the trust grantor’s instructions and protect the principal assets used to fund the trust. Mistakes with asset management are a common issue for those tasked with trust administration.
Trustees should make decisions that maximize a trust’s value
A trustee holds a position of power and implied trust. That position also creates a fiduciary duty to the trust itself and its beneficiaries. A trustee should make decisions based on what is best for the trust, its assets and its beneficiaries.
Sometimes, a trustee in control of financial accounts must make investment decisions about those assets. Other times, they may have to sell physical assets used to fund the trust in order to distribute those assets to beneficiaries. Such actions may take place right after someone dies or over the course of the trust’s administration as liquid assets get expended.
In either situation, the trustee should do their best to make wise decisions. Trustees who fail to act in the best interest of the trust, either by making significant mistakes or by prioritizing their own profit over the protection of the trust itself, could face challenges from beneficiaries.