We can all agree that the role of trustee is a high honor. The person you choose to fill this position will be given a great deal of trust and responsibility—and can potentially leave a lasting legacy for generations to come.
If you’re looking for someone who’ll act as your legal representative in the eyes of the law, handle your affairs like a respectable maven, and not let any cash from the estate go to waste, these tips will help you find just the right candidate.
Should I choose my child or spouse as my trustee?
One of the most important steps in estate planning is selecting an individual who you can trust to make decisions on your behalf following your death or incapacitation.
The decision of whether to appoint a spouse or child as a trustee is a personal one that needs to take into account many factors.
What are your views on divorce and remarriage? If you are unsure about how your spouse will handle the assets if they were to divorce themselves from you, then it might not be a good idea for them to serve as trustee.
However, if you trust them completely, then this might not be an issue. They may simply transfer the assets in question into a revocable living trust at some point during your marriage anyway, thus making them irrelevant for purposes of estate planning.
How much money would your spouse need to handle? As always with financial matters, it is wise to consider whether the party in question can afford the time and effort required by serving as trustee without being compensated either directly by you or through some other means such as life insurance proceeds.
If they do not have enough time or financial resources available, they should likely opt out of becoming a trustee unless they are willing and able to accept payment for their services (again possibly via life insurance).
Who will care for you if an unprecedented event occurs? In addition to considering who can afford and manage this role, it’s important that both parties understand what would happen after one of them died or became incapacitated while serving as a trustee.
Who would continue managing these assets? It might actually be best for family members from both sides—including children from pre-existing marriages—to become co-trustees so that there will always be someone qualified who can step up when needed.
Should I choose my accountant, attorney, or trusted adviser as my trustee?
The best way to answer this question is to look at the different types of trustees and what they offer. The most common type of trustee is your lawyer, who can help you with the legal side of things and settle any disputes that arise from your will.
Your attorney shouldn’t be your first choice if you’re looking for someone who’s financially savvy or well-versed in estate planning, though.
It’s also possible to assign multiple people as co-trustees. In fact, this strategy can be an excellent way to cover all your bases while also making sure that at least one person you trust takes care of managing the money after you die.
Should I choose a bank or trust company as my trustee?
Bank and trust companies have far more resources than most family members, so it’s likely that your choice for trustee will come from one of these organizations. But is it always best to use them as trustees?
Trustees are often chosen from large banks or trust companies because they can offer greater services at lower costs than smaller organizations.
However, banks and trust companies can also have an impact on your estate plan by charging higher fees for their services and making changes that aren’t necessarily in line with what you provided in your original document.
This is why it’s important to make sure that any organization serving as a trustee will act in accordance with your wishes by providing proper communication throughout the process.
You can either create an entirely new document outlining what provisions or amendments need to be made or informally give instructions through conversations with family members or friends who could step into this role after you’ve passed away.
Is it recommended to choose more than one trustee?
When you’re deciding who will manage your estate after your death, it’s tempting to want to appoint a single person with ultimate control.
But having multiple trustees can sometimes be the better option, especially if you’re hoping to maintain a sense of fairness and balance in your financial legacy by distributing duties among different people and interests.
Having two or three people overseeing your affairs can ease some concerns about one person having too much power over the future of your loved ones if you feel it’s the right choice for you.
In general, it has been shown that splitting up decisions into smaller boards is an efficient way for both corporations and non-profits to operate. So why shouldn’t that work for you?
Choosing the right trustee is a significant decision you can’t take lightly. Your investments and generational wealth depend on your trustee, so choose wisely.