My brother loved to juggle when we were kids (let’s face it, he still does, to his wife’s dismay). It was when he reached for the eggs at my grandmother’s house that her shriek of concern (“BILLY!”) would hit its highest note. Oddly, that image comes to mind when I think about trusteeship and the considerations it faces, such as:
- What does the trust document say?
- What did the grantor intend?
- What does state law have to say?
- Bonus and particularly fragile egg – what does the beneficiary need or want?
Each “egg” is fragile on its own, but trusteeship requires managing them all at once – truly a juggling act!
So, what can we do to quell our internal shrieks of concern?
Reduce uncertainty.
Can we eliminate uncertainty? Of course not. But juggling inherently means mitigating risk (and avoiding a splattered egg on the floor, or someone’s face!)
Here are four ways to reduce uncertainty in your trust’s administration:
- Provide a grantor side letter
- Helps give context to understand values
- Reduces beneficiary suspicion
- Provides a tiebreaker if the trustee is on the fence
- Be thoughtful about your dispositive language
- Think Goldilocks- vague enough to adjust for unanticipated issues but specific enough not to be a blank check
- Engage with the beneficiaries at the very beginning of administration to manage their expectations, be specific!
- Explain that you are managing current needs with future needs and the concept of principal erosion
- Consider having an internal procedure where you define specific language and what that means for the beneficiary, be consistent!
- To the extent you can make discretionary rules at the outset, it will create consistency and trust for the beneficiary, and clarity for you and your team
Trusteeship will never be free from uncertainty. But thoughtful planning, communication, and consistency can keep far more eggs from hitting the floor.
What sources of uncertainty have you seen create the biggest problems in trust administration? Blackbird Trust Services focuses on the practical realities of fiduciary administration and reducing avoidable conflict before it begins.