          
          
          
          The Role of the Trustee:
          
          
               As you can readily understand from the discussion
          of charitable remainder trust investment policy, the
          role of the trustee is crucial to success.  While trust
          management can be complex and time consuming, in most
          situations the trustee can usually handle the work with
          occasional assistance from an attorney or investment
          planner.
               There is a natural tendency on the part of a donor
          to want to serve as the CRT trustee, and the law does
          not forbid this dual role.  However, as noted before,
          this arrangement immediately raises questions of
          conflict of interest, especially about the character of
          investments the trustee may choose.  A donor who does
          not serve as trustee still has a significant degree of
          continuing control, because the donor can reserve the
          right in the trust declaration to change the trustee at
          any time.  The donor can also ask the trustee to change
          the nature of the CRT investments from low-yield growth
          assets to high income investments, at any time the
          donor/beneficiary needs steady income.
               Realistically, the creation and operation of a CRT
          usually means there is a close working relationship
          between the donor/beneficiary and their personally
          chosen trustee.  In a serious dispute, the beneficiary
          can always look to the courts to protect his or her
          interests, if the trustee is thought to be engaged in
          activity inimicable to the best interests of the trust.
               The duties of a trustee include selling at the
          best price possible the appreciated assets transferred
          to the trust; investing the proceeds from the sale in
          the manner that will best advance the trust goals;
          arranging the cash flow needed for periodic
          distributions to beneficiaries; annual evaluation of
          trust assets; filing federal trust tax forms (IRS forms
          1041A and 5227); maintaining a trust bank account and
          accurate records of income, expenses, payouts and
          accumulations of income and capital gains; and,
          informing beneficiaries of how they must personally
          report annual payouts for tax purposes. 
               For obvious reasons, if the donor/beneficiary does
          serve as a trustee, it is highly advisable to have a
          co-trustee with full authority to make the annual value
          determination required in a unitrust CRT, so there will
          be no question about impartiality.
               Another approach that is little known, but of
          great utility, is for the donor to be the trustee, but
          use a firm specializing in the administration of
          charitable remainder trusts to handle the accounting,
          tax returns, and often, retaining investment managers.
          
          
          
