The Duties of a Trustee in Michigan
Trust administration in Michigan involves a complex interplay of legal and financial responsibilities. A trustee is a fiduciary entrusted with managing trust assets for the benefit of the beneficiaries. The trustee plays a crucial role in ensuring the trust's smooth operation and the proper distribution of assets to beneficiaries. In this article, the Probate and Estate Planning attorneys of Thompson Legal will explore the key duties and responsibilities of a trustee administering a trust in Michigan.
Please note that this post is not exhaustive, and every situation is unique. In the event that you have legal questions it is advisable to speak with a licensed attorney. Contact Thompson Legal to speak with a Michigan Probate and Estate Planning attorney today.
Understanding the Trustee's Role
The trustee's role is complex, demanding a high degree of integrity, diligence, and often, sometimes even specialized knowledge. The trustee's responsibilities can include managing investments, distributing assets, keeping records, and upholding the terms outlined in the trust document. They act as fiduciaries, meaning they are legally bound to act in the best interests of the beneficiaries. This fiduciary duty must underscore all of their actions and decisions throughout the trust administration process
Key Duties of a Michigan Trustee
A trustee is a fiduciary entrusted with managing trust assets for the benefit of the beneficiaries. Michigan’s Estates and Protected Individuals Code (EPIC) outlines these duties, specially MCL 700.7801, which outlines the various duties of a trustee. These legal obligations include:
Duty to Notify: MCL 700.7814 requires that within 63 days of accepting their position, a trustee must notify the qualified trust beneficiaries, as well as keep them reasonably informed.
Duty of Loyalty: The trustee must act solely in the best interests of the beneficiaries. This means avoiding any conflicts of interest, refraining from self-dealing, and not using trust assets for personal gain.
Duty of Good Faith: Trustees are bound to act in good faith, making decisions with honesty and integrity, always striving to do what is right and fair, even beyond their own personal opinions.
Duty of Prudence: MCL 700.7813 mandates that trustees manage trust assets with the same care, skill, and caution as a prudent person would manage their own affairs. This includes making informed investment decisions, diversifying assets to minimize risk, and taking steps to safeguard trust property from loss or damage.
Duty of Impartiality: When a trust has multiple beneficiaries, the trustee must act impartially towards all of them, as per MCL 700.7815. This requires a delicate balance, ensuring that the needs and interests of all beneficiaries are considered fairly and that no beneficiary is given preferential treatment.
Duty of Act Expeditiously: A trustee is requested to administer the trust efficiently and without undue delay. Timely action is often crucial to preserving trust assets and fulfilling the grantor's intent.
Duty to Account: Transparency is a cornerstone of trust administration. MCL 700.7816 requires trustees to keep detailed records of all trust transactions and to provide regular accountings to the beneficiaries. This allows beneficiaries to understand how the trust is being managed and to identify any potential breaches of duty.
Duty to Act in Accordance with Trust Terms: A trustee must adhere strictly to the terms of the trust document, carefully following the grantor's instructions regarding asset management, distributions, and all other aspects of trust administration.
Additional Trustee Duties:
Duty to Collect and Protect Assets: This involves identifying, gathering, and securing all assets that belong to the trust, which could range from bank accounts and real estate to stocks, bonds, and business interests.
Filing Tax Returns: Trusts are subject to taxation, and the trustee is responsible for filing all necessary tax returns and paying any taxes due. This requires careful record-keeping and often involves working with tax professionals.
Duty to Enforce Claims: The trustee has a duty to enforce any claims the trust may have against third parties.
Duty to Defend the Trust: In some cases, the trustee may need to defend the trust against legal challenges, such as claims from creditors or disputes among beneficiaries. This may involve hiring legal counsel and representing the trust's interests in court.
Breach of Trust: Consequences and Remedies
When a trustee in Michigan fails to uphold their fiduciary duties, they open themselves up to serious consequences. A breach of trust can occur in various ways, such as mismanaging funds, self-dealing, favoring one beneficiary over another, or neglecting to provide accurate accountings. A trustee who fails to fulfill their duties can be held personally liable for any losses suffered by the trust. Beneficiaries have legal recourse to address breaches of trust, which may include removal of the trustee, surcharge, or potential injunctive relief.
Navigating the Path: Seeking Legal Guidance
Serving as a trustee is a significant undertaking with complex legal and financial implications. Whether you are considering becoming a trustee, currently serving in this role, or are a beneficiary of a trust, seeking legal counsel is crucial. An experienced attorney can provide guidance on your rights and responsibilities, help you navigate the complexities of trust administration, and protect your interests.
Serving as a trustee is a significant responsibility with far-reaching legal and financial implications. Understanding the duties and obligations involved is crucial for anyone considering or currently serving in this role. For further guidance on trust administration or any estate planning needs, please contact Thompson Legal today to schedule a consultation with an experienced Probate and Estate Planning attorney.
This article is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with a Probate and Estate Planning Attorney, please Contact Thompson Legal at (734) 743-1646 to schedule a consultation.
