Trusts can be essential to an estate plan. Individuals can spend a great deal of time deciding which assets are placed in a trust. Estate planning advisors say equal consideration should be given to choosing the fiduciary or trustees who will manage the trust.
The size of a California estate, the complexity and scope of a trust and the financial skill set of a potential trustee are factors used to come to a trustee decision. Family members, close friends or associates are often first choices. Professional estate managers, like trust companies or banks, offer expertise and neutrality on family matters.
A trustee’s duties can be extensive. Estate asset management and distribution are time-intensive tasks, especially when trusts affect heirs over several generations. Financial and legal savvy or experience is almost an unavoidable requirement for the trustee position.
What might be hardest for a family member who becomes a trustee is managing the trust without overlapping personal influence. A trustee’s own feelings or the desires of heirs cannot affect administrative duties.
Corporate trustees have no personal investment, but they do cost money. Fees paid for professional trustees are inescapable, usually equal to an asset percentage. Family members are often willing to manage a trust for little or nothing.
Banks or trustee companies are frequently recommended for trusts with more than $50,000, although a larger trust that is not complicated could readily be handled by an individual. Corporate trustees are also advised for long-term trusts, simply because the trusts often outlive individual trustees.
Consider the work the trustee job entails, especially when considering an individual to do the job of asset management. Asset distribution, tax filings, investment choices and administrative work are required.
Third-party or professional trustees can be useful for individuals who expect disputes among heirs. A compromise solution that an increasing number of estate planners are suggesting is a co-trustee arrangement – a family member and a corporate entity who work together to manage the trust.
Source: online.wsj.com, “A Matter of Trust,” Jeanine Skowronski, Sept. 10, 2012