In our previous post, we began discussing several factors to take into consideration when selecting a trustee to manage your trust assets. As we already mentioned, it is important to consider the size and complexity of the trust assets, as well as the ability of any family members to carry out the tasks of a trustee while leaving personal interests aside.
Another thing to consider in selecting a trustee is the dynamics between the beneficiaries. If family members do not get along well, it may be unhelpful to select a trustee from within the family. In such cases, it is more common to go with a corporate or other professional trustee. Estate owners that have been married several times may also want to obtain an impartial third party, so as to help avoid family fighting and litigation. A corporate trustee is also an option.
A final consideration is to think about having a mixed or hybrid arrangement. For instance, an estate owner could select a close family member as the executor or trustee, and also hire a professional such as a lawyer, accountant or corporate trustee to help them perform their duties. They could also hire a professional trustee to act as a co-fiduciary with a close family member.
Having this kind of arrangement allows one to reap the benefit of both arrangements. Because there is a lot of flexibility, the duties in these arrangements can be divided in various ways. For instance the professional trustee may have the responsibility of day-to-day administrative duties, while the close family member could have the responsibility of handling investments. Another possibility is for the professional trustee to be in charge of the assets, while the family member could be responsible for paying money out to beneficiaries.
Whatever arrangement one chooses for a trust, it is important to speak with an attorney to discuss all the options on the table. Doing so will ensure that best possible arrangement is selected.
Source: Wall Street Journal, “A Matter of Trust,” Jeanine Skwronski, September 10, 2012.