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Can a trustee use the trust’s money?

On Behalf of | Jul 25, 2023 | Estate Planning |

Trustees have a fiduciary duty to manage a trust for its intended beneficiaries or purpose. Generally, this responsibility means they cannot use the trust’s assets for personal gain, such as buying private properties. Failure to uphold this duty may result in various legal consequences, including lawsuits.

Does a trustee have access to the trust’s assets?

Some people believe that creating a trust prevents them from controlling their assets. This is generally untrue, as it is possible to name oneself the trustee of their own trust. This way, the grantor or creator of the trust retains control and the ability to access their assets.

But even when the trustee is not the grantor, the trustee may still access the trust’s funds. However, there are limitations to this right.

When can a trustee withdraw money from the trust?

There are several instances where a trustee may withdraw from the trust’s funds. For instance, they might do so to pay for third-party expenses like:

  • Funeral expenses for the grantor or beneficiary
  • Debts by the grantor’s estate
  • Taxes owed upon the grantor’s passing
  • Repairs on real estate owned by the trust

Trustees may also use the trust’s money to fulfill their fiduciary duties. For example, they might invest on the trust’s behalf and withdraw money to pay for associated fees. However, these investments must benefit the trust and its beneficiaries. Investing for the trustee’s personal benefit usually constitutes a breach of fiduciary duty.

There are complex rules governing trustees and their fiduciary responsibilities. Consulting with an estate planning attorney can help clarify these rules and prevent violations that could lead the trust into legal and financial trouble.