Choosing The Right Trustee For Your Estate

Selecting a trustee is an important decision and may be more complex than it seems at first. Depending on the type of trust you are creating, the trustee will manage your trust, distribute assets, prepare and file (or hire someone to prepare and file) trust income tax returns, make decisions regarding trust funding, and carry out your wishes after you are deceased or incapacitated. The following are some things to consider in making the decision as provided by an East Greenwich, RI probate lawyer who has helped families with net worth values over $300 million.

What Skills Will The Trustee Need?

The trustee has a fiduciary relationship with your beneficiaries, meaning that he or she must act in their best interests in light of the terms of the trust. The trustee must also manage trust assets prudently and is in charge of administering the trust. Some of the typical duties include investing funds, paying bills, filing taxes, opening bank accounts, and deciding when to distribute either income or principal to beneficiaries. The complexity of the estate matters. For example, if the trust holds and manages real estate or business interests, the trustee should be equipped with the skills to operate and keep those assets productive.

Family, Friend, Or Professional?

People often default to considering family or friends as our friends. This is understandable given that trust and knowledge of how you would make certain decisions are often reliably found in the people who know you well. Some downsides to choosing family and friends are that emotions can cloud their judgment, there could also be favoritism issues amongst the family. Finally, many times you set up your trust with the intention that beneficiaries be supported in certain ways. This may not align with what your beneficiaries want, resulting in the trustee making some unpopular decisions.

Appointing a professional trustee such as an attorney, trust company, or financial institution can solve many of the challenges that come with appointing a family member or friend as trustee. The downside, however, is if you use a large financial institution your beneficiaries might lose the personal touch. Furthermore, institutional trust departments are very sensitive to risk and, as a result, operate in a more systematic approach. Finally, while family and friends may serve as trustee without a fee, there will be a cost associated with engaging a professional or institutional trustee

Ultimately, the choice should be made considering the trust’s complexity. For example, a trust distributing a set amount of cash to adult children would likely be fine with the appointment of a reliable sibling as a trustee. But a trust containing real estate portfolio or business assets may benefit from a trustee with more specialized experience.

You can have the best of both worlds by appointing your family attorney or CPA and a family or friend as co-trustees.

Enter Trust Protector

If you want the comfort and familiarity of a friend but want to plan for contingencies, a trust protector can be appointed. A trust protector is often an attorney (but can be anyone) whose job it is to oversee the trustee and, in some cases, have the power to remove and replace the trustee.

Irrespective of who you choose, it is important to have a candid discussion to determine both suitability as well as interest. One thing you never want to do is name a trustee that is unwilling to accept the significant responsibility of trust management. If you need help with a trustee, contact a lawyer at Aptt Law LLC; founded in 2014, we have helped countless clients just like you!

Disclaimer:

The Rhode Island Supreme Court licenses all lawyers in the general practice of law, but does not license or certify any lawyer as an expert or specialist in any field of practice. This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice, nor the formation of a lawyer client relationship.
No Attorney-Client Relationship Created by Use of this Website. Neither your receipt of information from this website, nor your use of this website to contact Aptt Law LLC (hereinafter “the Firm”) or one of its lawyers creates an attorney-client relationship between you and the Firm. You will become a client of the Firm only if and when you sign an engagement agreement setting forth the scope of the Firm’s engagement, the fee arrangement and other relevant matters.
Disclosure Under IRS Circular 230: Any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related transaction or matter.

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