One of the many concerns clients often have with their estate plan is designating a trustee for their trust. As the name indicates, it should be someone you trust implicitly to manage your financial affairs after your passing and, sometimes, during your life. For that reason, it should be someone who is “good with money.”
Most people look to their spouse first, followed by their children to serve as trustees. Younger couples often choose their guardian for their minor children to be the trustee. There are advantages to these choices: often, they are beneficiaries so they waive their fee for managing the trust estate. Additionally, these choices make trust administration simpler and therefore less expensive. However, the oversight problem invariably comes up. Who is making sure that the trustee is doing their job, preserving the assets, and not stealing from the estate? The issue is more pronounced when long-term administration is required by the terms of the trust. Also, choosing one person is difficult enough, but choosing alternates can make the question overwhelming. When clients perceive their children as being bad with finances, they often decide to designate a professional and sometimes urge their attorney to take on the role.
It is very important that you trust your attorney. Having faith in your attorney’s competence is a hallmark of the relationship. Clients form especially close bonds with their estate planning attorneys as the attorney knows the family structure, the attorney discusses really heavy and important topics with the client, the attorney is well-informed of the client’s wishes, and the attorney knows the process. As a result, clients are often surprised when the attorney declines to serve as trustee.
No matter how much you trust your attorney, it is often better to choose another option as the experience of being an attorney does not necessarily qualify one to be a trustee. One possibility is to create a system of checks and balances among your fiduciaries. Perhaps the trustee and guardian are different people so that each can ensure that the other isn’t squandering the assets through the annual trust financial report. Another possibility is to designate co-trustees. You may require that they work in concert, although doing so may create additional hassle, or you may permit each to act individually but require that each stay informed of the other’s actions.
If there is truly no one in your family you believe is suitable to handle the trust finances, you could consider a professional fiduciary. Fiduciary fees vary significantly, but are generally less expensive than a financial institution. You may often interview and choose a fiduciary that you like and who you feel is competent.
Finally, you could consider a financial institution to manage your money. Although these days it might be wise to question how “good with money” your bank is, financial institutions offer a fairly safe solution to the issue of a trustee. As with most things, different financial institutions may be better or worse fits depending on your situation. Your attorney should be able to help you weigh the options and relay other client experiences with certain types of solutions.
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