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Acting as Executor, Attorney or Trustee

Most people who find themselves as an Executor, Attorney or Trustee end up consulting a lawyer for general advice on their obligations and general advice on how to get things done. This is a very good idea as each role carries with it substantial responsibilities and substantial liabilities if not properly carried out. All three are similar in that all three are really trustee position and involve the management of someone else's money in that position. While one should always consult a lawyer to assess the entire range of problems faced in such a situation, here are some of the golden rules:

  • A Trustee is prohibited from profiting from their position, save and accept the standard compensation set by the Courts.
  • The Trustee must keep accounts and full financial records of all the property under their care.
  • The Trustee must act as reasonably and prudently in the management, preservation, conversion and spending of trust property and there are frequently restrictions on the types of investments that a trustee must invest in and the types of expenditures allowed.
  • The Trustee must act with an even hand between all beneficiaries. The basic rule requires that the Trustee should spend as much of the income as is reasonable to look after any person who has a life interest but also attempt to preserve the capital.
    Trustees occupying positions as Attorneys or Guardians of the Person and Property under the Substitute Decisions Act are required by that legislation to make their decisions in consultation with the family and bearing in mind the terms of any Will.

Where the trustee has breached their obligations by placing property into their own name or profiting the consequences can be rather severe. The Trustee is required to account for any benefits which means to pay them to the trust and to compensate the trust for any damages that resulted from the breach. This is a frequent mistake by trustees and when brought to the attention of the Court almost always results in an order to return the property and the removal of the trustee and payment of the legal costs by the former trustee. Further, from a Criminal Law point of view it is considered a form of fraud and if prosecuted is dealt with more seriously by the Courts owing to the vulnerability of the victim and the trust placed in the trustee. The general rule is if transferring large assets out of the name of a incompetent person a lawyer should be consulted to avoid any transaction that could get the trustee in to trouble, the lawyer will always advise a trustee to in effect get the permission of all t he next of kin and those entitled to the persons estate upon their death.