A Trust can be a powerful estate planning tool, and you need to make several decisions when creating a Trust, including choosing a Trustee to manage the assets of the Trust for the benefit of the named Beneficiaries. But a Trustee does not necessarily have to be a family member or a trusted friend.
To review how a Trust works – A Trust is a legal mechanism used as an estate planning tool that allows property to avoid probate. When you create a Trust, you transfer assets such as a real estate, stock, or even cash, to the Trust. These assets are then managed for the benefit of the Beneficiaries by a Trustee. While a Grantor, the person creating the Trust, may choose to act as the initial Trustee in the case of a Living Trust, obviously they must choose a Successor Trustee to handle the Trustee duties upon their death or incapacitation.
Some estates may choose to use the services of a professional to handle the Trustee duties. A professional Trustee, or Trust Officer, charges for their services. The fee is normally a percentage of the assets that they are managing. In using a professional to carry out the Trustee’s duties, you have the advantage of using a trained professional to handle assets, but some may feel the Trustee may not make the sensitive decisions that managing a family Trust may require. In this case, making trust documents as specific as possible may overcome this drawback, but others may just see this as an advantage.
A Trustee, whether it is a professional or a loved one, will always have a fiduciary obligation to the named Beneficiaries of the Trust. This obligation is not only an ethical one, but a legal obligation as well.
Trustee duties range in complexity from simply distributing property to Beneficiaries, to handling a large portfolio of stocks and bonds. Discuss your choice with a Trust Attorney, as he/she will be able to offer more insight into your particular needs, while creating a Trust that meets your estate planning goals.
- How Estate Planning for a Family May Trap the Unwary Practitioner - August 31, 2022
- State Income Taxation of Social Security Benefits - August 24, 2022
- Understanding Tax Apportionment Clauses - August 17, 2022
