Tips For Choosing The Right Trustee
A trust is a legal entity that can either hold your assets for you during your lifetime or hold your assets for your beneficiaries after you pass away. A trust must have a trustee, which is someone who administers the trust. If you create a trust, you should consider appointing your own trustee (rather than having the court name a trustee upon your death). As such, the following article will provide some tips for choosing the right trustee.
What is a trustee?
A trustee is either a person or organization that holds the legal title of an asset or group of assets for another person, who is referred to as the “beneficiary.” A trustee is granted this type of legal title through the creation of a trust, which is essentially a relationship in which a person that owns assets gives the trustee the right to hold the title to those assets for the benefit of a third party (referred to as the “third-party beneficiary”). Usually, the creator of the trust document (referred to as the “grantor” or “trustmaker”) chooses who will be the trustee, but in some cases, the court may be required to appoint a trustee.
- Appoint a trustee with common sense. When choosing a trustee, you should make sure to find someone with good judgement and common sense. This involves knowing when it’s time to involve an expert to help with the administration of the trust. You will need someone who is good at researching and isn’t afraid to ask for help.
- Make sure that the trustee you choose will be available. When choosing a trustee, you should make sure you take into account the person’s age, overall health, and the likelihood of that person being around to administer your estate. As such, it is not generally advised to appoint someone your age or older than you as your trustee. It may also be wise to appoint a corporate trustee as a backup.
- Choose corporate trustees wisely. A corporate trustee is a bank, financial institution, or trust company which is hired to manage a trust. A corporate trustee differs from an individual trustee because this kind of trustee has professional experience in trust matters that a family member or friend may not have. However, you may have to pay corporate trustees more than an individual trustee, and corporate trustees may also be more impersonal. Additionally, because they are business entities, corporate trustees can often be more inflexible due to increased liability and the fact that they must answer to shareholders.
- Consider appointing a team of trustees. It may be helpful to appoint co-trustees in cases where you have a substantial amount of assets. Additionally, having more than one trustee can be beneficial when one trustee has to make a difficult decision regarding the trust. Keep in mind however, that appointing more than one trustee could result in friction between the parties regarding the administration of the trust. As previously mentioned, it may be helpful to also appoint a corporate trustee as a backup.
- Make sure to reevaluate your choice in the future. You should always reevaluate your choice for trustee after major life changes, such as a divorce or death. You will need to make sure that these life changes have not negatively impacted the way that your selected trustee will choose to administer your trust after you pass.
Do You Have Questions about Establishing a Trust? Contact our Firm
When deciding to create a trust, it is important to consult an estate planning attorney to ensure that all of your assets are properly disposed of and that all of your wishes are addressed. If you are considering creating a trust, the experienced Norwood estate planning attorneys of Fisher Law LLC can thoroughly explain your options and help you throughout the process. Call us today at (781)-821-8800 or use our online form to schedule an appointment to speak with us.