A lot of people assume that they should use a last will as an asset transfer vehicle if you are not extremely wealthy. This is one of the most commonly held misconceptions that people harbor about the estate planning process.
There are trusts that are used by wealthy people that are exposed to the federal and/or New York estate tax, but there are other trusts that can be appropriate for a wide range of people. The trust that is right for many individuals of relatively ordinary means is the revocable living trust.
As the name indicates, you can revoke the trust at any time after it has been established. This is one form of control that you retain, and you can also act as the trustee and the beneficiary while you are living.
In the trust document, you name successors to assume the roles after you become incapacitated or pass away. We will look at the benefits of revocable living trusts in a different post, but in this piece, we will focus on the administration process and the selection of a trustee.
Choice of Trustee
If you utilize a living trust, you have to make a decision with regard to the trustee. Any adult that is of sound mind that is willing to assume the role can technically serve as a living trust trustee.
First, it should be noted that it is perfectly legal to name a beneficiary as the trustee, and this is something that is commonly done. This could make sense if you are leaving all of the assets in your trust to your only adult child, and you have no problem with handing over total control.
Short of this, you can name a trustworthy person that you know that has a good bit of financial acumen and common sense. Anticipated longevity is definitely a something that you should take into consideration if you want the trust to remain intact for an extended period of time. This is less important if the trustee will be distributing all the assets as soon as it is possible.
Of course, you have to be sure that the individual that you name in the trust document is willing to assume the role. There is some personal liability, and depending on the circumstances, it can be time-consuming and stressful.
Real or perceived potential conflicts of interest should be considered when you are making your choice. For example, you may give the trustee the latitude to make discretionary additional distributions under hardship circumstances. Someone that is conflicted could act in their own self-interest, and even if they are not, others could accuse them of self-dealing or favoritism.
If you do not know anyone that would be a suitable trustee, you have options if your trust is sufficiently funded. There are professional fiduciaries that provide trustee services, including banks, trust companies, financial advisors, and some attorneys. Their fees are considerable, but the utilization of a paid fiduciary can be the right choice in some cases.
Attend a Free Webinar
Over the years, we have consistently conducted workshops to help educate our neighbors about the importance of the estate planning process. Since this approach is not a sensible option in light of the novel coronavirus, we have transitioned our workshops into webinars.
You can obtain the same great information without leaving the comfort and safety of your home. To check out the dates and obtain registration information, visit our webinar page and follow the simple instructions.
We Are Still Here to Help!
We are conducting business as usual, but we are taking a remote approach to our consultations. If you would like to discuss your estate planning goals with an experienced attorney, we would be more than glad to provide assistance.
You can call us at 585-374-5210. There is also a contact form on this website that you can use to send us a message.