Choosing a Trustee
Experience and Knowledge
A Trust is Only as Effective as the Trustee Who Manages It
If you have made a decision to incorporate trusts into your estate plan, then you are faced with the important question — “Who will be my trustee?” A trustee should have the experience and knowledge to handle all of the necessary legal duties and responsibilities, while providing continuity of management and assurance that your plan will be carried out according to your wishes.
Expertise and Experience
The legal duties and responsibilities of a trustee are numerous. A trustee needs to interpret legal documents, understand fiduciary accounting and tax rules, demonstrate sophistication in making investment decisions, and exercise discretion in making distributions to beneficiaries and handling complicated family dynamics. In addition, trust laws and tax rules vary by state, and the rules are constantly changing. Identifying a professional trustee with deep expertise to handle complex legal and tax matters, as well as experience to manage sensitive family dynamics, will ensure that your trust is administered properly.
Confidence in fairness
Objectivity is Paramount
When it comes to money and families, it can be an impossible task for a family member or friend to be objective and neutral when making the sensitive decisions required of a trustee. From dividing up family heirlooms to negotiating disagreements amongst beneficiaries, even routine trust administration tasks can be complicated by an emotionally invested trustee. A professional trustee can take the emotion out of making tough decisions while giving beneficiaries the confidence that they are being treated fairly and without bias. For the best of both worlds, an individual family member or friend can serve as co-trustee along with a professional trustee to bring that important personal perspective and knowledge of family history to trust administration.
High fiduciary standards
Continuity of Management
With such high fiduciary standards for the effective management of trusts comes potential liability for the trustee. This is why professional trustees dedicate their full time and resources to trust administration matters. An individual trustee might have an unexpected illness or a planned vacation, which could hold up time sensitive investment transactions or beneficiary distributions. Because a professional trustee has a dedicated team of trust professionals to administer your trust, there will never be a disruption in the management of your trust.
Depth of Service
A common barrier to naming a professional trustee is fees and how those fees will impact trust performance. Typically, a professional trustee will assess fees based on a percentage of assets under management. While a family member or friend might not charge fees to serve as trustee, that individual will likely have to rely on subject matter experts such as attorneys, tax consultants and financial advisors, many of whom charge hourly. A professional trustee will typically coordinate a suite of experts in trust administration, tax, investments and special asset management, as well as ancillary services for your beneficiaries. Your trust will benefit in the long-run from the cost efficiency of having these important resources all in one place.
After taking these critical factors into consideration, the decision to name a professional trustee can leave you peace of mind knowing that your beneficiaries and the wealth you leave for them will be served by the care and efficiency of an experienced firm.