Best Practices for Trustees Who Rely on Others to Assist With the Administration?

Practices for trustees often face their toughest challenges when trustees bring in outside help. Managing a trust requires more than just good intentions—it demands legal compliance, financial accuracy, and clear communication with beneficiaries. Most trustees need support, and hiring professionals like accountants, attorneys, or even involving trusted family members can ease the burden. However, this step comes with potential pitfalls.

Delegating tasks doesn’t mean handing over responsibility. Trustees must stay involved, monitor decisions, and ensure everyone follows the trust’s terms. Missteps can lead to liability, disputes, or financial errors. To succeed, best practices for trustees include documenting decisions, vetting all outside advisors, and maintaining transparency with beneficiaries. These habits help trustees uphold their duties while minimizing risks and conflict.

Know the Scope of Your Authority

Trustees must understand the limits of their power. The trust document is the first place to look. It outlines the trustee’s duties, the beneficiaries’ rights, and any rules for distributing assets or involving third parties. Trustees who act outside the terms of the trust can be held personally liable.

Some trust documents allow the trustee to hire professionals. Others require court approval or beneficiary notice before taking that step. Always follow the trust’s instructions to avoid legal problems down the line.

Choose the Right People to Help

Work with Licensed Professionals

Trustees often need financial or legal guidance. Hiring a certified public accountant (CPA), financial adviser, or estate planning attorney is a smart move when taxes, investments, or legal questions arise. Always check credentials and confirm experience with trust matters.

Be Careful with Friends or Family

Trustees sometimes ask close friends or relatives to help with day-to-day tasks. That’s fine for routine errands or paperwork, but avoid assigning them duties that involve decision-making or money management unless they are formally qualified and the trust allows it.

Confirm No Conflicts of Interest

Avoid hiring people who may have a personal stake in the trust. Conflicts of interest can create tension with beneficiaries or raise legal red flags. If hiring a beneficiary or someone related to one, document the decision carefully and consider getting legal advice.

Keep Control of Decision-Making

Delegating does not mean handing over full authority. Trustees must stay involved in all major decisions. This includes reviewing reports, signing off on disbursements, approving investments, and overseeing how professionals handle their roles.

Stay active in communication with the people you delegate to. Ask questions. Review their work. Make changes if you see warning signs.

Create Written Agreements

Put all delegation arrangements in writing. Contracts with CPAs, attorneys, or investment advisers should describe their scope of work, compensation, and duration of service. Even informal arrangements should be documented with emails, memos, or letters.

Written agreements help prove that the trustee acted prudently and provide a clear record in case of disputes with beneficiaries or legal challenges.

Document Everything

Trustees must keep thorough records. This includes:

• All correspondence with professionals
• Receipts and invoices
• Investment summaries
• Distribution logs
• Annual accountings

Good recordkeeping protects the trustee and helps beneficiaries understand how decisions were made. If someone challenges the administration, these documents can show that the trustee acted in good faith and followed legal standards.

Communicate with Beneficiaries

Clear, timely communication builds trust and prevents disputes. Beneficiaries have the right to know what’s happening with the trust. Trustees should provide regular updates and be open about who is helping with administration.

If professionals are involved, tell the beneficiaries what roles they play and how they are paid. This transparency keeps everyone on the same page and reduces suspicion or misunderstandings.

Suggested Communication Practices

• Provide annual accounting
• Send notices before major decisions
• Respond to questions within a reasonable time
• Share names and contact info of professionals assisting you

Understand Liability Risks

Even when trustees hire professionals, they stay legally responsible for what happens with the trust. Delegation does not shield them from claims of mismanagement or breach of duty.

To protect yourself:

• Choose help wisely
• Monitor performance
• Act in the best interest of the beneficiaries
• Stay within your authority

If you fail to supervise or rely on someone who acts improperly, you may be held liable for losses to the trust.

Consider Fiduciary Insurance

Fiduciary liability insurance can cover legal fees and losses if someone sues you for breach of trust. This insurance does not eliminate your responsibility, but it offers a safety net if something goes wrong.

Check with a lawyer or insurance agent to see if this coverage makes sense for your situation, especially when the trust holds valuable assets or has multiple beneficiaries.

Know When to Say No

Sometimes a task may be outside your ability or comfort level. If you feel overwhelmed or unsure about how to proceed, don’t guess. It’s better to step back and seek help than to make a mistake that puts the trust at risk.

In some cases, a trustee can request to resign or petition the court to appoint a co-trustee. That option should be used only after careful thought and legal advice, but it may be the best way to protect the trust and everyone involved.

Common Mistakes Trustees Should Avoid

Relying on Unqualified Help

Well-meaning friends or family may offer to help, but without proper experience or credentials, they may do more harm than good.

Failing to Supervise

Even if you hire a professional, you cannot ignore what they do. Trustees who take a hands-off approach may face legal consequences.

Not Disclosing Conflicts

Failing to tell beneficiaries about business ties or family connections can damage trust and lead to legal challenges.

Ignoring the Trust Document

Every trust is different. Don’t assume what worked for another trust will work for yours. Read and follow the document carefully.

Final Thoughts

Practices for trustees must include careful delegation and active oversight. While bringing in help can ease the demands of trust administration, trustees must remain fully engaged. Delegation does not mean handing off responsibility. Trustees must keep detailed records, supervise all assistance, and communicate consistently with beneficiaries.

Choosing the right professionals—whether accountants, attorneys, or advisors—can strengthen trust operations, but only when trustees make informed, documented decisions. These practices for trustees help prevent disputes, reduce liability, and ensure the trust serves its intended purpose.

If you’re unsure about your responsibilities, consult an experienced estate planning attorney. With the right legal guidance, you can carry out your duties effectively and protect the trust’s beneficiaries.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material contained in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed trust and estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way to help you learn more about your situation when it comes to these important subjects.

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