Serving as trustee of an estate of someone who has passed away is a major responsibility. failing to understand the terms of the trust document and the specific duties outlined within it can lead to errors in asset management and distribution. navigating the complexities of administering a trust requires careful attention to detail and adherence to legal obligations.

As such, as the trustee, you should avoid common mistakes like those we will discuss below.

Trustee mistake #1: Not understanding your duties

Whether you knew you would serve as the trustee ahead of time or not, the responsibilities can be overwhelming when the time comes to carry them out. Serving as a trustee entails significant legal and fiduciary responsibilities, including managing trust assets, distributing income and principal according to the terms of the trust document, and acting in the best interests of the beneficiaries.

In general, though, you should be prepared to:

• Identify and locate all assets belonging to the estate, including bank accounts, investments, real estate, and personal property.

• Determine whether probate is required to administer the estate based on the size of estate and applicable state or provincial laws.

• Identify and settle any outstanding debts and expenses of the estate, including funeral expenses, taxes, and creditor claims.

• Prepare and file any necessary tax returns for the deceased individual and the estate, including income tax returns, estate tax returns, and any other required filings.

• Distribute assets of the estate to beneficiaries according to the terms of the will or applicable laws if there is no valid will.

You may want to talk to a lawyer about your obligations and how to navigate the administration and probate process to avoid costly missteps.

Trustee mistake #2: Failing to stay organized

Often, there is a lot of paperwork and deadlines of which a trustee must keep track of. Without proper organization, important documents may be misplaced, deadlines missed, or critical tasks overlooked. This can result in confusion among beneficiaries, disputes over estate assets, and even legal liabilities for the executor or administrator.

By staying organized, estate administrators can streamline the administration process, minimize errors, and ultimately fulfill their duties more effectively. estate administrators should establish a systematic approach to estate administration, including maintaining detailed records, creating a timeline of tasks, and utilizing tools such as spreadsheets or software to track progress.

Trustee mistake #3: Mishandling money

Financial decisions are among the most pivotal choices you make as a trustee, as they can have a direct impact on beneficiaries. Mishandling money during the administration of an estate can have serious consequences and erode trust among beneficiaries. This can lead to legal disputes, allegations of misconduct, and even removal from the role of executor or administrator.

Not only could you be dealing with angry family members, but you could also experience financial penalties for oversights like failing to file taxes on time or negligence.

Trustee mistake #4: Failing to act in the best interests of the decedent

If you do not comply with the directions of the deceased, you could face severe penalties for breach of trust.

Breach of trust claims can stem from actions including:

• Using estate or trust assets for personal gain or purposes unrelated to the beneficiaries' interests.

• Failing to fulfill duties and responsibilities outlined in the trust document or required by law, such as timely distribution of assets or filing required tax returns

• Making distributions to beneficiaries that are not authorized by the trust document or exceed fiduciary's authority.

• Disregarding rights of beneficiaries, including their entitlement to timely and accurate information, and their ability to challenge the fiduciary's actions.

• Engaging in transactions with the estate or trust in which the fiduciary has a personal interest, such as buying estate assets at below-market prices.

If you do not uphold your duty as the trustee in these or any other ways, you could wind up facing legal, financial and personal ramifications. Therefore, you should make every effort to avoid these missteps.