“Just say no”

Image result for quote the ability to say no classic

Let’s be honest, people-pleasers are very nice people to be around.  People pleasers will go out of their way to say “yes”.  They will very rarely give you a hard time, and will be personally pained if they have to say “no” to anything you ask of them.

Let’s be honest again, people-pleasers make horrible trustees.

Why?  Because, the whole point of placing your assets in trust is to place restrictions on the “how, why, and when” your money can be accessed by your beneficiaries.  If you did not want those restrictions imposed, then presumably you would have given it outright to your beneficiaries.  However, restrictions are only as effective as person policing them.  Therefore, if you have a weak trustee who just wants to please beneficiaries, then your restrictions are likely to be ignored and your trust will be as worthless as the paper it is written on.

Therefore, along with honesty and organizational skills, one of the most important skills for a trustee to have is the ability to “just say no” to a beneficiary.  By the way, this is one of the reasons why I like professional trustees and trust companies(See the related blog entry on this site).

The ability of a trustee to “just say no” and to respect the boundaries, limitations, and restrictions that you placed on the trust assets is what separates whether or not you will have your intentions fulfilled. Just like a battery powers your phone, a trustee is the battery that powers the terms of your trust.

For example:

Let’s say that you have a trust that provides income to your son, and then gives the trustee discretion to distribute principal of the trust (trust assets $$) to your son for his health, education, maintenance and support.  This means that your trustee has the ability and fiduciary duty to decide whether or not your son’s requests for the trustee to pay for things falls into one of these four categories (health, education, maintenance, or support).  If the trustee believes that your son’s request does not fall into one of these categories, then the trustee has the duty to tell the beneficiary: “No.”

O.k., let’s look at how this plays-out with a little scenario:

Your son, who has a nasty temper (sorry) and resents that you handcuffed his inheritance in a trust, gets into New York University.  Your trustee readily agrees to pay for his tuition as an education expense under the trust.  Now, your son starts to look at his housing options. He decides he does not want to live in the dorms because they cramp his style, and prefers to have the trustee rent him a very expensive Greenwich Village condo.

Of course, your son demands that the payment of his rent be paid from his trust as either an “educational”, “support”, or “maintenance” distribution.  The trustee thinks this is a bad idea.  First, the condo is about 20x the expense of living in the dorms. Second, the trustee thinks that you would have wanted your son to learn how to cope with a potentially uncomfortable living situation.  Third, what freshmen gets to live in a Greenwich Village condo?  Lastly, there are cheaper housing options available in Queens or Staten Island.  However, your trustee knows that if he says no to your son, your son will have a meltdown and start threatening the trustee with lawsuits.  After all, your son resents the fact that you “handcuffed” his inheritance by placing it in a restrictive trust, and your son believes that your trustee has no right to keep him from his money.   What should your trustee do- Go the easy route and say, “yes”, or face the hassle of threats and lawsuits by doing right thing and saying, “no”?

As we all know, saying yes is easy.  Being a people pleaser is easy.  Saying “no” is hard, especially if it means that we might face anger and retribution.  However, the ability to say “no” is truly the fine-line between whether your trust will be administrated according to your wishes, or whether it is simply an ATM for your beneficiaries.

If you went so far to make a trust, and want to make it work then do yourself a favor– In addition to choosing a trustee who is honest and organized, also make sure that the trustee has the ability to “just say no”.  Because remember– inheritance is poison, and beneficiaries (who often resent trusts) can be relentless when it comes to pounding down the trustee’s “door” demanding money.

Good luck out there.