The naming of a trustee can be an important part of creating one’s estate plan. When establishing a trust many people choose a close friend or relative as trustee. While this often works well, naming a professional trustee can be a better option.
Serving as trustee is a big job and a lot to ask of a friend or family member. Furthermore, being a trustee requires a good background in finance and tax. The possibility of making poor financial decisions may be too much for someone chosen largely because of their relationship with you. Most non-professional investors do less well than the market as a whole. Getting professional help by itself can make up for the cost of a professional trustee. Lawyers and accountants often serve as professional trustees.
It is likely that friends or family members won’t have the needed knowledge of finance, law, taxes, and specifically estate taxes. They may not be qualified to manage the trust. It is unfair to the beneficiaries of the trust to pay for services the trustee is not qualified to perform. Paying them may lead to bad feelings between family members and/or friends.
Solely having a friend or family member as trustee may subject them to family disputes. Friends may not appreciate being immersed into a family argument and family members may bring their own emotional baggage with them which can exacerbate the situation.
A professional trustee will take on the job of managing the trust with a business-like approach. They will not be part of family disagreements or disagreements among the beneficiaries. It is important to have someone administer the trust who is skilled in money management, taxes, and preservation of trust principal.
A good option is to have a family member as co-trustee along with a professional trustee. That way beneficiaries are not only dealing with a professional who they may not know. Decisions will be made by the professional and the family member together, combining professional management with better communication and decisions that reflect the family’s values. A professional trustee can take care of all the administrative work, allowing the family member to participate in any investment and distribution decisions that need to be made.
Having the right trustee or trustees is vital. It has a huge bearing on the longevity of your trust and on the distribution of your trust to your beneficiaries. Work with an estate planning attorney to ensure you have the right trustees appointed for your estate. Contact Shoffner & Associates to review and update your current estate plan or to create a new one. Remember, one’s estate plan should be reviewed every three years.
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Freya Allen Shoffner, Esq.
Shoffner & Associates
Counselors to Small Business and Families.
Give Freya a call at (617) 369-0111 TEXT US (413) 207-6219 or email fashoffner@shoffnerassociates.com
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