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When you establish a trust–whether it’s a revocable living trust, a testamentary trust, or a special purpose trust such as a special needs trust–you’ll need to name a trustee. Picking the right trustee is critical to ensure that the goals of the trust are fulfilled and that your finances, and your family, are protected. Continue reading for a few items to consider when deciding upon a trustee for your trust. Call a knowledgeable West Palm Beach estate planning and elder law attorney with any questions or for help planning your estate.
A trust is a fiduciary arrangement under which the trustor (the person who establishes the trust) grants another party, the trustee, the right to hold property or assets for the benefit of the trust beneficiary. When you pick a trustee, then, you’re deciding upon the person or entity to take charge of the property, money, and other assets to be held by the trust.
The trustee is responsible for managing trust assets and ensuring that the terms of the trust are followed. The trustee will maintain the trust assets and, where appropriate, invest them in such a way as to preserve them and make them productive for future use. The trustee is also responsible for making trust disbursements to beneficiaries, in accordance with the dictates of the trust.
The trustee is, moreover, responsible for administrative responsibilities, such as maintaining and preparing any records, statements, or tax returns as needed, making decisions that arise according to the provisions of the trust, resolving issues that arise, and communicating regularly with beneficiaries.
Given the responsibilities of a trustee, it’s important to pick someone whom you can trust (no pun intended). Many people choose a family member or trusted friend to act as trustee. While you can certainly choose someone you know in your personal life, make sure that you choose someone you would trust to make important financial decisions on behalf of you and your family.
It’s a good idea to pick someone who is financially astute, good with money, respectful, and not impulsive. Ideally, you’ll pick someone who has some familiarity with the basic concepts of investing, preferably with their own assets currently invested or that are being managed by an investment adviser. The trustee does not have to make every investment decision on their own; rather, you’ll want to pick someone who knows how to find and retain a reliable investment adviser to handle the trust funds.
It may feel comfortable to have a personal friend or family member acting as trustee. There are financial advantages, too: Your personal acquaintance might not charge a trustee fee. However, it may be worthwhile to consider hiring a professional trustee or trust company, someone with actual expertise in trust administration.
A trust is like a business or an investment account; you want someone you can trust to handle your assets with utter professionalism and competence. Hiring a professional also lessens the risk of interpersonal conflict. If your trustee is a friend or family member, they may resent doing the work without getting paid a fee, or a beneficiary might be personally offended if the trustee denies a requested disbursement of funds, even though the trustee is doing their best to follow the trust terms. The trustee might even get caught up in the family drama. With business and with money, it often pays to have a professional, arms-length relationship.
A trust & estates attorney at Shalloway & Shalloway can help you protect your family, creating an estate plan tailored to the needs and circumstances of your family. We will evaluate your situation to determine the best type of will, trust, or other legal tools that may benefit you and your loved ones the most. Contact the diligent, thorough West Palm Beach estate planning attorneys of Shalloway & Shalloway at 561-686-6200.