Beneficiary As Trustee - Legal Guide
Can a Beneficiary Be a Trustee
Yes, a beneficiary can also be the trustee of a trust. This is a common arrangement in estate planning, particularly within families. It can simplify administration and reduce costs, but it also comes with important legal responsibilities and potential conflicts of interest.
Roles and Responsibilities
A trustee has a fiduciary duty to manage the trust assets for the benefit of all beneficiaries. When a beneficiary is also the trustee, they must balance their personal interest with their legal obligation to act impartially.
- Duty of loyalty to all beneficiaries
- Duty to manage assets prudently
- obligation to avoid self-dealing
This means the trustee-beneficiary cannot favor their own interests over those of other beneficiaries. They must keep detailed records and act transparently to avoid challenges to their actions.
Potential Advantages and Pitfalls
Having a beneficiary serve as trustee can be efficient. They are often familiar with the grantor's wishes and other family members. It can also save money on professional trustee fees.
However, the main risk is conflict of interest. Other beneficiaries might suspect favoritism, leading to disputes and potential litigation. It is often wise to include clear instructions in the trust document and consider appointing an independent co-trustee for major decisions.