Are you setting up an estate plan and searching for someone to name as the trustee for your estate? Naturally, you likely considered naming a family member or friend as your estate’s trustee, seeing as they are the most familiar with you and vice versa. In most cases, family and friends would not think to charge you a trustee fee either, making them the more affordable option.
However, your family members and friends might be too close to you to make this decision ideal. While selecting a trustee who knows you and your family’s dynamics very well has its benefits, there are drawbacks to this decision as well, especially in the context of drama.
Opting for a trustee who is more distanced from your personal life might be the smarter decision because they will be able to view your beneficiaries and your estate plan through an unbiased lens. This way, you can ensure that everyone will be treated fairly.
For instance, consider selecting a family law attorney or an accountant who already has familiarity with your family. They might even agree to charge a lower rate compared with, say, a trust company or corporate option that has people with no prior knowledge about your family dynamics.
However, will the former option have the same structured approach to settling your estate as an official trust company does? The answer might be no, but is that even what you want? Consider your preferences and go from there.
Trustees take on a lot of time-consuming tasks, and they work on accounts that can take years to finalize. There could be several liabilities and responsibilities on their shoulders as well when it comes to managing your estate and distributing all your assets to the appropriate beneficiaries.
Trustee Duties Include:
- Managing trust-related expenses
Think about the costs associated with hiring a professional as your estate’s trustee. Plus, the person whom you appoint as your trustee will more than likely hire other professionals whose main focus will be on helping the trustee manage your accounts. From attorneys and certified public accountants to custodians and investment managers, trustees usually don’t do everything on their own. You will need to pay taxes, as always.
- Making informed yet difficult decisions
Trustees are responsible for coming to conclusions that are not easy to make, but that’s their main goal. As such, you need to ensure that whoever you appoint as the trustee over your estate has the ability to maintain an objective perspective regarding trust-related matters.
- Holding onto records and reports
Inquire about the potential trustee’s ability to file tax returns, keep accurate records, and document matters in a traceable manner. These are qualities that trustees must absolutely embody, so do not overlook this aspect when choosing one.
- Ensuring that assets are safeguarded
Trustees can use insurance as one of the many ways to safeguard the assets. When seeking a trustee for your estate, inquire about safeguarding protocols and what the trustee would do if beneficiaries need assistance with the management of their share of your estate.
- Offering consistent, reliable services
The trustee of your estate will be the main point of contact for your beneficiaries, so ask about their ability to communicate with various people and to help beneficiaries understand matters regarding the estate.
Your Trustee Choice Matters
When you decide to hire a professional as your estate’s trustee, selecting the right person to take on the responsibility of managing your estate in your absence is not a process to take lightly. Remind yourself that the trustee will be the main person who oversees your accounts, handles your assets, and distributes what must be disbursed to all your beneficiaries.
Your trustee must not only be trustworthy but also understand how to manage and invest money wisely and demonstrate strong financial judgment. Establishing a loved one as your trustee can result in significant concerns, and they are more likely to make emotional choices rather than decisions based on logic.
Ultimately, the choice is yours. If you still aren’t sure what you would prefer to do, reach out to a professional who handles estates and ask them to factually walk you through the pros and cons of choosing a family member or friend versus a company as your trustee.
To find out more about the duties of a Trustee, read our article A Close Look at a Trustee’s Duties.
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