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Hi, this is Stewart Albertson with Albertson & Davidson. We do get the question from time to time can my brother who is the trustee of our parents’ trust, can he also be a beneficiary of the trust? And the short answer is yes, there’s no problem with that. In fact, most trustees are also beneficiaries of the trust. Most parents will name one or more of their children to be the trustee and that trustee will also be a beneficiary.
This normally doesn’t cause too many problems, especially where there’s just liquid cash to distribute. Because, let’s say there’s a trustee and two other beneficiaries, for a total of three beneficiaries including the trustee. You would simply just take the liquid assets and distribute them, one-third each. And that’s not a problem.
Where we see the problem happen is where the trustee, who is also a beneficiary, is the last one taking care of mom or dad before their death and they get a house, for instance, that comes out of the trust as their beneficial interest, and the other two kids get cash.
What we see in some of those cases, is the trustee taking the cash before mom and dad dies and fixing up the home, putting a lot of money and improvements in the home. Well, that’s not fair, because they’re essentially using the other beneficiaries’ money. The trustee is using the other beneficiaries’ money to improve the house that they’re ultimately going to receive.
So, while there’s nothing wrong with a brother or sister acting as trustee who’s also a beneficiary, we do want to make sure that they provide an accounting so we can see their actions as trustee, to make sure that they didn’t do anything to benefit themselves at the cost of the other trust beneficiaries.