TRUST AND ESTATE PLANNING
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Choosing Your Trustee
Choosing Your Trustee - A Guide To Help You Choose Wisely
Protecting your assets and loved ones even after your passing means creating an estate plan including choosing your trustee. An estate plan commonly includes a will, a living trust, a power of attorney, and a health care directive.
Though you can create a flawless estate plan that could carry out your demands even in your absence, this can only be effectively carried out if you are careful in choosing your trustee.
With the help of trust and estate planning attorney and expert Andrea Aston, here is a guide on the several things to consider in choosing a trustee, including understanding of the trustee’s responsibilities, financial and corporate capabilities, decision-making skills, and reliability.
Remember that the purpose of choosing the right trustee is to ensure your financial legacy nd final wishes are carried-out according to your intentions, objectives, and decisions for the benefit of your loved ones.
The following is a thorough discussion whether you should choose a family member, a trusted corporate attorney, accountant, or adviser, or a bank or trust company for your trustee.
Choosing A Family Member
If a person is not familiar with the situations that may arise when an estate plan is executed, one would easily claim that a family member, such as your husband or a child, should be the trustee. However, there are circumstances wherein family members as trustee can be s disadvantage..
A trustee is given duties under state law and that entails impartial decision-making for the interest of beneficiaries, proper accounting, cautious and wise investment on trust funds, managerial tasks of assets, and avoidance of self-dealing.
When you consider these duties, a family may or may not be the best choice, especially when your trustee clearly needs expertise in corporate, managerial, and legal matters.
Choosing your trustee carefully means weighing the strengths and weaknesses of your possible trustees based on the given responsibilities. A family member, say the husband, could qualify as a trustee if he can meet the said standards and perform the duties effectively.
However, if the spouse is not an expert on those areas of responsibilities, a family member is not the best choice. In such instances, the trust will be open to abuse due to ignorance, especially in the hands of a relative with little trust experience.
Aside from considering the expertise on the areas of responsibilities of a trustee, you can also consider the advantage of choosing a family member. One of which is the understanding of the needs of the beneficiaries because of existing familial ties.
Assuming that the trustee, being a family member, is close to the beneficiaries, one would be more sensitive to the needs of the family when deciding on important matters regarding the living trust.
A trustee from the family could charge for the trustee’s cost but may waive the cost of administrative services, making it a cheaper choice. However, we cannot disregard that family conflicts and resentment may arise when one is chosen among the beneficiaries to be a trustee.
Choosing Your Attorney, Accountant, or Financial Adviser
The primary concern in choosing a trustee is expertise. Thus, your attorney, accountant, or financial advisor can be possible trustees for your estate plan. If a client has a trusted relationship with any of the mentioned professionals, they are the best pick for a trustee.
They are the ones who can carry out decisions on estate, financial, and personal goals, and decisions are expected to be objective and fair for all beneficiaries since there is no blood-relation with anyone.
Though they are good candidates for the role of a trustee, it is not automatic that they understand all the duties inherent to being one.
If you choose to have a lawyer as trustee, it is better to choose an estate planning attorney who can be reliable in their field of expertise, while exhibiting all other capacities of a professional taking charge of a living trust.
A disadvantage that you can expect in choosing a professional for a trustee is the additional or higher cost for administrative responsibilities compared to corporate trustees, which we will discuss next.
Also, the family’s estate planning attorney, who created the estate plan that will be carried out, could be a conflict of interest for the attorney. Ensure that if you choose an estate planning attorney as trustee, they are not the ones in-charge of the creation and provisions of an estate plan to avoid such conflict.
Choosing Corporate Trustees
Corporate trustees refer to banks and trust companies. They are working specifically to meet the demands of the responsibilities of a trustee. Thus, it is expected that they will exhibit professional behavior and expertise in carrying out the estate plan objectively without any conflict of interest.
This will avoid the disadvantages of having family members or professionals as trustees. The corporate trustees’ procedures and systems are crafted for the very purpose of being a trustee, which ensures that your estate is well cared for.
They are expected to manage your assets and invest funds fairly and consistently for the interest of the beneficiaries. In any case that breach of trust happens and they need to replace lost trust value, your assets are insured through capital reserve requirements for added solvency.
If you intend to have corporate trustees to manage your property and investments after your passing, make sure that you will pick those who can ensure high standards of service, just like those provided by corporate fiduciaries with state or national charters authority.
On top of the expectations among corporate trustees that would be an advantage for the execution of your estate plan, the policies and procedures that they follow are unbiased and crafted to provide trust decisions that are usually needed.
Thus, your corporate trustee can present to you the decisions that could be made in your absence based on existing policies. If there are circumstances that the policies cannot cover, only then that corporate trustees would need to make decisions for the interest of the beneficiaries.
They can also provide monthly account statements and written explanations for trust decisions to be made regardless if it is covered by existing policies or not. In terms of expenses, cost will be more predictable since corporate trustees publish their fees.
They usually charge between 1.0% to 1.5% of trust assets for annual administrative fee. Lastly, they can centralize smaller trusts instead of administering them locally.
Need Advice in Choosing Your Trustee? Andrea Aston Can Help You
These three options above for your trustee are good choices depending on the circumstances. Every client’s decision should be the one provided in the estate plan since no one knows your assets and beneficiaries more than you do.
The specific circumstances influencing the decisions about your properties and finances will be different from others, so it is wise to seek the advice of a trusted estate planning attorney on how your estate plan can be carried out effectively and how to choose your trustee carefully.
For the best estate planning services, you can always count on Andrea Aston of Trust and Estate Lawyer for efficient and simplified legal assistance. I mk things easy to understand. Call today for a free consultation at 760-758-1565 for more information.
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