Choosing a trustee to manage your trustee is a very important decision. The very fact that the word “trust” is a part of the title given to this person implies that your trustee should be someone that you trust completely. The reason you must trust this person is, depending on the type of trust you establish, that your trustee can perform financial duties on your behalf that could have a huge impact on your financial well-being. For example, you may give your trustee the power to buy and sell property, collect income on your behalf, pay bills, file and pay taxes, make investments and provide for the financial support of your family.
Of course, a trustee is required to maintain and keep accurate books and records; however, in cases of abuse, these records are often forged to hide the abuse. Therefore, your trustee is someone that you trust completely to manage your finances for you and for your family.
Who Can Serve as Your Trustee?
The person you name as your trustee will depend on the type of trust. For example, you may not serve as your own trustee for most irrevocable trusts but you can be your own trustee if you choose a revocable living trust. For married couples, the spouse can also serve as a trustee on a revocable living trust. In fact, for couples who have substantial assets and/or who have been married for a long time often serve as co-trustees on their own revocable living trust. This is beneficial in the event that a spouse dies or becomes incapacitated; the other spouse continues to manage the trust.
On the other hand, you do not have to serve as the trustee of your trust. You may choose someone that you trust such as a friend, child or other family member. In some cases, you may feel more comfortable choosing a corporate trustee such as a trust company or a bank as your trustee because the people in these departments have experience managing trusts and investing money.
Some people shy away from turning over power to another trustee; however, simply because you name another person as your trustee does not mean that you are giving up control. The trustee must still follow the terms and conditions set forth in the trust agreement and you can replace the trustee if you feel that he or she is not fulfilling the duties set forth under the trust agreement.
There are times when you may want to consider naming a professional or corporate trustee. Examples include but are not limited to:
You are widowed, elderly or in declining health
You do not have children, family or a trusted friend
Suitable candidates do not have the ability or the time to serve as your trustee
You may not have the time, desire or ability to serve as your own trustee
You are using an irrevocable trust that does not permit you to serve as your own trustee
Professional and corporate trustees have the experience, time and resources to manage your trust to help you meet your investment goals. Professional and corporate trustees will charge a fee to manage your trust but most of the fees charged by these companies are quite reasonable, especially when you consider the experience, services provided and investment returns.
Before You Make a Final Decision on a Trustee
Naming a trustee is a huge step. This person will be responsible for managing your finances. Before you make a final decision as to who will serve as your trustee, take time to do the following:
Evaluate if you are the best choice as trustee or if another party would do a better job for you.
If you do choose to be your own trustee, consider naming a co-trustee who can learn about your trustee, your desires, the needs and personalities of your beneficiaries and your goals. Having a co-trustee allows you to evaluate this person to determine if this is who you want managing your trustee in your absence.
Be care and realistic when evaluating your trustee candidates. Do not let emotions interfere with sound judgments.
If you are considering a professional or corporate trustee, compare several trustees. Review their services, investment returns and fees before deciding which company is the best for your needs.
You can serve as your own trustee in a revocable living trust.
If married, your spouse can serve as your co-trustee.
Most irrevocable trusts do not permit you to serve as your own trustee.
Even though you may be your own trustee, you may not be the best choice.
You can choose an adult child, other family member, a trusted friend or a professional or corporate trustee.
Naming someone else to be co-trustee with you helps them become familiar with your trust, allows them to learn firsthand how you want the trust to operate and lets you evaluate the co-trustee’s abilities.
Talk to the estate planning attorneys at Krause Donovan Estate Law Partners, LLC. Their experience and knowledge can help you have the peace of mind of knowing not only that you have a plan, but that your plan still creates exactly the legacy that you want. Contact Attorney Daniel J. Krause or Nelson W. Donovan today.
Reach us through our website or call our office at (608) 268-5751 to schedule your confidential, no obligation initial consultation