Saturday, May 31, 2014
When constructing your estate plan, one of the many important decisions to make is determining who will serve as the trustee. Since a trustee will have control over your assets for a number of years, choosing the wrong trustee might impede your interests. Below are three factors you should consider when selecting a trustee:
- Naming your children may not be the best idea. While many people want to give their children positions of authority in their estate plan, this can actually be a disastrous consequence if the decision is made prematurely or without proper advice. If you are planning on using your children, ensure they get along. Often, “people [accuse] their siblings of stealing assets from a trust . . . siblings refuse to give each other required information . . . [and] it can be difficult for them to make decisions without creating bad feelings.”
- Consider using a professional. Another option is to name a professional trustee. This can be an institution or individual, such as an attorney. Although this is a more expensive option, in many situations it is the best choice especially if there are family issues. Even if this is not the case, when a large amount of assets exists, naming a professional trustee can help ensure better overall management.
- Include power of removal. It is important to know that you can give beneficiaries the power to remove and replace the trustee. However, this power should be limited. It should be available to help the beneficiary in bad situations, such as if a trustee is unreasonable restrictive with respect to distributions.
See Tracy Craig, Selecting a Trustee? 3 Factors to Consider, Financial Planning, May 29, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.