A Trustee has a duty to invest and manage trust assets.  How to go about investing Trust assets depends upon the goals of the Trust, Ohio law, and the beneficiaries’ needs.  The goals of the Trust can be determined by simply looking at the Trust language.  Ohio law dictates that a Trustee consider a number of factors when making investment decisions:  The general economic conditions, the possible effect of inflation or deflation, the expected tax consequences of investment decisions or strategies, the role each investment plays within the overall trust portfolio, the expected total return from income and appreciation, other resources of the beneficiaries, need for liquidity/regularity of income/preservation of capital, an assets special relationship or special value to the purposes of the trust or a beneficiary.  To find out the beneficiaries needs, it is best to have regular contact with the beneficiaries.  Do the beneficiaries have upcoming college costs, home ownership, medical expenses, long-term care costs, etc.    

A Trustee must diversify trust assets unless he determines that because of special circumstances, the purposes of the trust are better served without diversifying.  Practically speaking, unless a Trustee has clear authority within the Trust instrument not to diversify, a Trustee should seek out the informed consent of beneficiaries.

A Trustee may want to consider hiring a registered financial advisor to invest and manage the Trust assets.  However, when delegating this duty, the Trustee should be careful to select a qualified candidate,  ensure that he establishes the scope and terms of the delegation and periodically reviews the Agent’s performance to make sure the Agent is complying with the scope and terms of the delegation.  So what does that mean practically? The Trustee should make sure that he has a written statement outlining for the Advisor what the purpose of the Trust is and what the expectations are- Is the goal to create income or build up principle? How old are the beneficiaries? When are distributions to be made? When does the Trustee expect statements? Will the Trustee pre-approve any transaction?, Etc.  Then, the Trustee should be reviewing all the statements received by the Advisor and have periodic meetings/telephone conversations.  The frequency of the meetings/telephone conversations will depend on the aggressiveness of the investments.  A Trustee also has a duty to only incur costs that are appropriate and reasonable.  So when delegating to a financial advisor, the Trustee should ensure that it is in keeping with the industry standard.

Whether you are a Trustee or Beneficiary, lack of knowledge of your responsibilities or rights can be costly.  Consider consulting a trust administration attorney for guidance.

To read Part I of this series on What is a Trust and Who Has to Know About it see http://www.randallperla.com/blog/lessons-for-trustees-and-beneficiaries-part-i-what-is-a-trust-and-who-has-to-know-about-it/

To read Part II of this series on Safeguarding Trust Property see http://www.randallperla.com/blog/lessons-for-trustees-and-beneficiaries-part-ii-safeguarding-trust-property/

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Cleveland Trust Administration Attorneys; Cleveland Beneficiary Attorneys; Cleveland Trustee Attorneys; Cleveland Probate Attorneys; Cleveland Fiduciary Attorneys; Cleveland Estate Planning Attorney; Cleveland Last Will and Testament Attorney; Cleveland Financial Power of Attorney; Cleveland Health Care Power of Attorney; Cleveland Living Trust Attorney; Probate Administration; Probate Litigation; Trusts and Estates; Contested Trusts and Estates; Decedents Estates; Estate Administration; Estate Litigation; Estate Planning for the Elderly; Estate Planning for Unmarried Couples; Estate Settlements; Family Trusts; Fiduciary Law; Fiduciary Liability; Fiduciary Litigation; Financial Planning; Living Trusts; Personal Planning; Powers of Attorney; Trust Administration; Trust Law; Trust Litigation; Trust Planning;

A Trustee must take reasonable steps to take control of and protect trust property.  Hence, if it is tangible property, property that you can touch and hold like antiques, an art or coin collection, cars, etc., the Trustee must take physical possession of that property and ensure that it is protected.  This can mean using a safety deposit box or a secure storage unit when appropriate. 

A Trustee must also keep trust property separate from his own property.  Trust property should never be intermingled with a Trustee’s own property.  A Trustee should keep good records concerning all trust property. 

Failure to safeguard trust property can open a Trustee up to a Breach of Duty action by a beneficiary to recoup any losses caused by a Trustee’s failure to protect the Trust property.  Prior to any Breach of Duty action, the Trust must be consulted as liability of Trustees is often limited by the Trust document.

Whether you are a Trustee or Beneficiary, lack of knowledge of your responsibilities or rights can be costly.  Consider consulting a trust administration attorney for guidance.

To read Part I of this series on What is a Trust and Who Has to Know About it see http://www.randallperla.com/blog/lessons-for-trustees-and-beneficiaries-part-i-what-is-a-trust-and-who-has-to-know-about-it/

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Cleveland Trust Administration Attorneys; Cleveland Beneficiary Attorneys; Cleveland Trustee Attorneys; Cleveland Probate Attorneys; Cleveland Fiduciary Attorneys; Cleveland Estate Planning Attorney; Cleveland Last Will and Testament Attorney; Cleveland Financial Power of Attorney; Cleveland Health Care Power of Attorney; Cleveland Living Trust Attorney; Probate Administration; Probate Litigation; Trusts and Estates; Contested Trusts and Estates; Decedents Estates; Estate Administration; Estate Litigation; Estate Planning for the Elderly; Estate Planning for Unmarried Couples; Estate Settlements; Family Trusts; Fiduciary Law; Fiduciary Liability; Fiduciary Litigation; Financial Planning; Living Trusts; Personal Planning; Powers of Attorney; Trust Administration; Trust Law; Trust Litigation; Trust Planning;

What is a Trust?

A Trust is a legal document that sets out the rules for the transfer of property (Ie. When the property will be distributed, How much, To whom, etc.). The person who creates the trust and is seeking to transfer his property is called the Settlor or Grantor.  The person who holds onto the property is called a Trustee and the person who is to benefit from the property is the Beneficiary. 

Who Has to Know About a Trust?

According to Ohio Law, unless the Trust says otherwise, a Trustee must keep all current beneficiaries of a Trust informed about the administration of the Trust.  If a beneficiary requests a copy of the Trust Instrument, the Trustee must provide it.  Moreover, if the Trust is an irrevocable Trust created after January 1, 2007 or a revocable trust that became irrevocable after January 1, 2007, the Trustee must notify the beneficiaries of the Trust’s existence, the identity of the settlor, the right of the beneficiary to request a copy of the trust and the right to a copy of the trustee’s report within 60 days of the trust becoming irrevocable.  In addition, a Trustee must send to current beneficiaries, and to all beneficiaries that request it, at least annually and at the termination of the trust, a report of trust property, liabilities, receipts and disbursements.

What Happens When the Settlor Dies and a Revocable Trust Become Irrevocable?

During the life of the Settlor, a Trustee only owes duties to the Settlor.  However, when a Revocable Trust become irrevocable at the death of the Settlor, the Trustee has a duty to inform the beneficiaries as mentioned above. 

 Whether you are a Trustee or Beneficiary, lack of knowledge of your responsibilities or rights can be costly.  Consider consulting a trust administration attorney for guidance.

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

Cleveland Trust Administration Attorneys; Cleveland Beneficiary Attorneys; Cleveland Trustee Attorneys; Cleveland Probate Attorneys; Cleveland Fiduciary Attorneys; Cleveland Estate Planning Attorney; Cleveland Last Will and Testament Attorney; Cleveland Financial Power of Attorney; Cleveland Health Care Power of Attorney; Cleveland Living Trust Attorney; Probate Administration; Probate Litigation; Trusts and Estates; Contested Trusts and Estates; Decedents Estates; Estate Administration; Estate Litigation; Estate Planning for the Elderly; Estate Planning for Unmarried Couples; Estate Settlements; Family Trusts; Fiduciary Law; Fiduciary Liability; Fiduciary Litigation; Financial Planning; Living Trusts; Personal Planning; Powers of Attorney; Trust Administration; Trust Law; Trust Litigation; Trust Planning;

Elizabeth L. Perla was chosen by the National Business Institute to speak at their “Trusts 201: Optimizing Trusts and Preventing Trustee Fiduciary Liability” Seminar in Cleveland, Ohio on August 12, 2011 on the Topic of Basic Investing Rules and Strategies and Trustee Fiduciary Duties. The seminar will be recorded in its entirety and can be obtained by contacting NBI directly.

 First, in order for a grandparent to be able to file a motion for custody or visitation with the Court, one of the following three circumstances must be present:

• The child’s parents are unmarried.
• The child’s parents are going through a divorce, dissolution of marriage, legal separation, annulment or child support proceedings.
• The child is involved in an abuse, dependency, or neglect case. 

How can a Grandparent Obtain Custody of a Child?

Obtaining custody of a grandchild can be very challenging because the Courts consider the right of parents to care for their children a fundamental right.

The U.S. Supreme Court held in Troxel v. Granville, that the parents’ right to the custody of their children is paramount to any custodial interest in the children asserted by a non-parent, including a relative like a grandparent.  However, there are three ways in which parents can lose their paramount right to care for their children.

• The child can be adjudicated an abused, neglected, or dependent child by the Court.  
• A parent can relinquish custody of the child through an agreement or contract.
• A parent can be found by the Court to be unsuitable to care for the child.

Once one of the above criteria is met, the Court will then determine whether it is in the child’s best interest for a third party, like a grandparent, to be awarded custody.

This high burden can be very difficult for many grandparents to understand, especially if they have provided substantial care for their grandchildren or even cared for their grandchildren exclusively for many years due to a child’s drug use or indifference or other circumstances. 

Although the burden is high, it is not insurmountable and every case is different.  If you are seeking custody of your grandchild, it is best to discuss your situation with a family law attorney.

How can a Grandparent Obtain Visitation Rights?

Once a motion for visitation rights is filed with the Court, the court will grant grandparent visitation if it determines that it is in the best interest of the child.  When determining whether it is in the child’s best interest, the court will consider the following factors:

• The prior interaction and interrelationships of the child with the grandparents;
• The geographical location of the grandparents’ residence and the distance between the grandparents’ residence and the child’s residence;
• The child’s and parents’ available time, including, but not limited to, each parent’s employment schedule, the child’s school schedule, and the child’s and the parents’ holiday and vacation schedule;
• The age of the child;
• The child’s adjustment to home, school, and community;
• The wishes and concerns of the child;
• The health and safety of the child;
• The amount of time that will be available for the child to spend with siblings;
• The mental and physical health of all parties- grandparents, parents and child;
• The willingness of the grandparent to reschedule missed visitation;
• Whether the grandparents have been previously convicted of or pleaded guilty to any criminal offense involving any act that resulted in a child being an abused child or a neglected child; whether the person, in a case in which a child has been adjudicated an abused child or a neglected child, previously has been determined to be the perpetrator of the abusive or neglectful act that is the basis of the adjudication;
• The wishes and concerns of the child’s parents, which must be afforded special weight by the Court;
• Any other factor in the best interest of the child.

If you are considering filing for visitation rights with your grandchildren, it is advisable to consult with a family law attorney.

Elizabeth L. Perla, Esq.

Law Offices of Randall M. Perla

19443 Lorain Road

Fairview Park, Ohio 44126

Phone (440) 333-2503

Fax (440) 333-9650

perlalaw@wowway.com

www.randallperla.com

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