It’s a common experience for individuals to wonder how to prevent trustee embezzlement. This has been happening for a lengthy period, and it is worth indicating that such individuals have not been able to address the situation. That’s why some families have been losing their assets to trustees. However, this does not mean you should do nothing if this problem faces your family. Here’s how to prevent inappropriate activities on trust assets.
1. Choose the Right Trustee
In your family, you must choose the right trustee. You should not just pick anyone to administer your family trust. The individual should be someone with a good reputation and who has no criminal record. You can also look for a corporate trustee because they have more structure and are regulated by the government. This will ensure that your assets are safe.
2. Set Up Meeting and Review Procedures
After choosing the right trustee, you should set up a meeting and review procedures. This will help to ensure that the trustee is adhering to the terms of the trust agreement. You can set up an annual meeting where you review the trust’s performance and make sure that everything is going as it should. You can also have a clause in the trust agreement that requires the trustee to regularly provide you with an accounting of the trust’s activities.
3. Require Pre-approval for Major Decisions
Another way to prevent inappropriate activities on trust assets is to require pre-approval for significant decisions. This means that the trustee cannot make any major decisions without first getting approval from the beneficiaries. This will help ensure that the trustee is not making any decisions that are not in the trust’s best interests. Fundamentally, you’re preventing the trustee from unilaterally making decisions that could jeopardize the trust.
4. Use the Right Documentation
Many families have lost their assets because they did not use the right documentation. You should have a trust agreement that is properly drafted and that sets out the roles and responsibilities of the trustee. The contract should also set out the duties of the beneficiaries. This will help to ensure that everyone knows their role and that there is transparency in the trust.
5. Monitor the Trust
You should also monitor the trust regularly. This means that you should keep an eye on the activities of the trustee and make sure that they are adhering to the terms of the trust agreement. You can do this by reviewing the trust’s financial statements regularly. This will help you catch any red flags that may indicate that the trustee is not acting in the best interests of the trust.
Conclusion
These are just some of the unique ways that you can prevent inappropriate activities on trust assets. It is crucial to take action to protect your family’s assets. Choosing the right trustee and setting up meetings and review procedures can go a long way in ensuring that your assets are protected. Contact Medina & Company Consulting, Inc. for help setting up your family trust.