Because you are dealing with the trust’s money and property, your duty is to make decisions that are best for Rose and any co-beneficiaries. This means you must ignore your own interests and needs, or the interests and needs of other people.
To help act in Rose’s best interest, follow these guidelines:
- Read the trust document and do what it says. Your authority is limited to what the document and Texas law allow. There may be duties required by Texas law even if they are not in the trust document. Talk to a lawyer if there is anything you don’t understand. Follow Rose’s directions in the trust document even if you have the best intentions in wanting to do something different.
- Understand when your duty as trustee becomes effective. The trust agreement may say that you become a trustee or a co-trustee right away or only when Rose can no longer make her own decisions. Check to see if the document says how you will know when Rose can no longer make her own decisions. If you are still unsure, talk to a lawyer.
- Avoid conflicts of interest. A conflict of interest happens if you make a decision about Rose’s money or property in the trust that may benefit you or someone else. As a fiduciary, you have a strict duty to avoid conflicts of interest, so you should avoid even the appearance of a conflict of interest. Sometimes people have good intentions but do things they shouldn’t. Because you are now a fiduciary, you should avoid any conflicts of interest. Here are a few examples of possible conflicts of interest.
- Should I sell trust assets to myself? Selling trust assets to yourself is almost always seen as a conflict of interest (called self-dealing). Talk to a lawyer before doing this.
- Should I do business with family? Rose needs repair work in her apartment. You hire your son and pay him from Rose’s money. This may be a conflict of interest, even though the work was needed. It appears that you have put your personal interest to benefit your son in conflict with Rose’s interests. If you choose to hire your son, consider documenting various bids received for the work, experience, and other factors that may justify hiring your son instead of another person or company to perform the work.
- Don’t borrow, loan, or give the trust’s money to yourself or others. Even though Texas law or the trust document may allow you to give a gift or make a loan, consider whether the trust can afford the gifts or loans, and whether they are in line with what Rose would have wanted. A lawyer can advise you regarding any effects on Rose’s taxes or on her plans to give away her property when she dies.
- Avoid changing Rose’s plans for giving away her money or property when she dies. There may be rare situations in which changing Rose’s plans is in her best interest. But you should talk to a lawyer to make sure that it is allowed by the trust document and Texas law.
- Be careful if you pay yourself for the time you spend acting as Rose’s trustee. Read the trust instrument to see whether you are allowed to receive payment for your work as trustee. Unless the trust instrument says otherwise, Texas law says that you can be paid, but that your pay must be reasonable. Carefully document your pay, how much time you spend, and what you do.