Trusts separate income from principal, allowing the trust instructions to distinguish between the two. This means that the trustor can instruct the fiduciary to distribute all income from the trust to a specific person and only distribute principal in certain circumstances, such as medical emergencies. This would prevent the trust from diminishing due to excessive withdrawals, ensuring that it will provide income for the rest of the beneficiary's life.
Laws require a fiduciary to follow safe investment strategies through the prudent investors rule of the state that has jurisdiction over the trust. Any fiduciary who is unfamiliar with financial investments and these laws should seek advice from a trained investment professional to avoid accidentally violating the law. It is also important for the fiduciary to closely follow the trustor's instructions regarding managing the trust and its investments because going against these instructions could also create legal problems.
The fiduciary is also responsible for filing income tax returns every year for the trust and providing a Schedule K-1 to each taxable beneficiary. A fiduciary who fails to file the tax return by the due date is usually responsible for paying any penalties and interest that the delay caused.
Any fiduciary who is unfamiliar with trust administration should speak with an attorney with any questions. Every trust is different, so it is important to examine all of the trust's guidelines before taking any actions, and an attorney can advise the fiduciary on whether the trust allows for a specific action or not. Any kind of mistake when administering a trust can lead to severe penalties for the fiduciary, so the trustee should always review every action before taking it.
Source: American Bar Association, "Guidelines for Individual Executors & Trustees", accessed on March 8, 2015