If you already have a trust or are simply thinking about establishing one, it is important to consider who you name as trustee because the trustee is responsible for carrying out your trust’s purpose. Along with this responsibility comes a heightened level of fiduciary duties. For most of us, it is easy to think that a trustee is merely someone who manages financial affairs for someone else. However, a trustee’s role is much more than that of someone who collects income, pays bills and taxes, invests, provides for beneficiaries, and keeps accurate records. A trustee must have the knowledge, skill, and training to make the best impartial decisions for the overall health of the trust, and do so.
Should I Fly Solo?
Should you name yourself as trustee? Depending upon the purpose of your trust and the type of trust you establish, it may be perfectly fine to make this choice. For example, you can choose to be trustee of your revocable living trust. Revocable living trusts by their nature suggest a greater level of flexibility that comes with the right to change one’s mind. As your needs and assets change and grow, however, you may be better off making another choice.
Understandably, no one likes to surrender control, particularly when it comes to their valuables. But, it is important to keep in mind that naming someone else as trustee or co-trustee with you does not mean you will lose control. In fact, in most circumstances you can replace your trustee should you have a change of heart. Also, it is worth mentioning that there are certain types of trusts where you do not have the ability to choose yourself as trustee (i.e. certain irrevocable trusts).
A Few Options
You, however, do not have to be your own trustee. For those establishing revocable living trusts, choosing a family member, relative, or a trusted friend to be trustee may be a good choice. Others may decide that naming co-trustees (two people who are familiar with the trust’s assets and purpose and manage it together) is their best choice. For example, married people are often co-trustees of their joint revocable living trust because their assets are often collectively owned, each spouse has a greater familiarity with the assets that are being managed, and there is a greater level of protection against interruption of trust administration should one of the spouses become incapacitated or die.
Professional Trustees
Certain situations may arise where choosing a professional or corporate trustee is your best choice. You may find that managing your own money is not as profitable as you would like. You may also wish to protect your assets from potential tax consequences, but you lack the education, skill, and training to adequately do so. Or, you may simply find that those who are closest to you lack the time and ability to take on the onerous task of managing your trust. In such scenarios, naming a professional or corporate trustee may be the best option for you. Should you decide to go this route, for a management fee you will likely benefit from efficient trust administration, a reduction to your workload, and tax and investment strategies from folks who keep up with changes in the law.
Matchmaking Made Easy
Contact The Ledbetter Law Firm, APC today to schedule your free consultation. We have years of experience assisting individuals like you make these difficult decisions. Our team of attorneys can help you evaluate your trust and trustee options based upon your financial goals, assets, and family situation; and advise you on how to select trustees that most closely align to your wishes. It is also our pleasure to educate your successor trustees so they will understand how to continue to carry out your wishes in the future. At The Ledbetter Law Firm, APC, we value your business and look forward to serving you every step of the way.