Individuals make important decisions everyday. However, when these decisions impact an estate plan, it is imperative to ensure that the terms and details of these documents meet your needs and are in fact valid. One type of document many consider including in the estate planning process is a trust. A trust can come in a variety of forms and can take on various purposes.
For those including a living trust in their estate plan, a testator must include a trustee. While it might seem like a fairly straightforward task, naming a trustee is an important step to take and can be difficult at times. Typically, a trustee is a child, friend, a family member, professional fiduciaries or a bank. The type of living trust and the purpose it serves often designates who would be a proper fit to act as trustee.
For married couples, when the first spouse dies, the other spouse will likely become the sole trustee. After the second spouse dies, the named person in the trust document is the successor trustee. In these matters, a child or children are names as the successor trustee. In some situations, this is not always the most ideal. Naming a child works out great if parents haven't been divorce, there is only one child, that child lives close by and all the assets are in investment accounts. One should note that if a child has a full-time job, acting as a trustee could be stressful and time-consuming. Thus, it might put a burden on them. Those thinking about naming a non-family member should be sure to include provisions in the trust to pay them reasonable compensation for their time and efforts acting as a trustee.
Using a professional fiduciary as a trustee provides an individual with a person who knows the ins and outs of the job. Because thy do this job for compensation on a routine basis, they do not have to take the time to learn what to do. Additionally, they do not have emotional ties to the testator. Finally, banks are very willing to act as a trustee, especially is the primary portion of your trust is held in financial assets that are managed by the bank. However, a bank's fees are typically higher than those of a professional fiduciary.
While drafting a trust, it is important to consider all the details of the document. This means naming the best trustee for you and your situation. If you are facing any challenges or issues related to your trust, it is important to understand your rights and options.
Source: The Press-Enterprise, "Women on Money and Mindset: Estate planning: choosing a trustee," Tami Sipos, Sept. 2, 2017