When you create your Trust, you could choose anyone to be your trustee. It could be a relative or it could be a trusted friend. However, administering a trust can be a lot of work and time, and there are very specific rules that must be followed. The trustee has to deal with legal and tax matters, manage assets, handle disbursements, and maintain good records. Sometimes it seems like a good idea to have someone you know to be the trustee, but it may be more responsibility than they want to bear when it comes down to it. It may be a burden for them.
A good alternative is a professional trustee – either an attorney experienced with trust administration or a corporate trustee (a trust department in a bank, or a trust company). While these services do cost money, it might be a better alternative in the long run. Here’s why:
Trusts are complex legal documents and the trustee needs to act in accordance with both the provisions set out in that documents and the laws that govern fiduciary duties. Professional trustees understand the language in the documents, knows what it means, and knows what the laws are in regards to a trustee’s duties. By choosing a professional trustee, you know that your trust will be administered effectively, efficiently, and within the bounds of the law.
Trusts can have nuanced tax implications that can be very impactful, and it is important that decisions regarding the trust be made with those implications in mind. Having a professional trustee means that they have the technical expertise to make the right decisions, or know to consult with someone else who does.
Friends and family members may or may not administer your trust in an unbiased way, especially when relationships are intertwined, emotions flare, and personal agendas can be forwarded. A professional trustee is above the fray and able to make objective, rational decisions based on the instructions given in the trust, and not based on family politics.
A professional trustee has his or her professional license on the line and is under greater scrutiny than a friend or family member, so there is less likelihood that they will handle the trust improperly.
When it is all said and done, you are creating a trust so that your wishes are carried out. The best way to ensure that happens just as you intend may be to have a professional trustee. Although well-meaning family and friends may be willing to serve as your trustee, it may better for everyone if they didn’t.
We can help you make the important decisions about who should be your trustee, as well as other aspects of your trust planning. Call us at (612) 206-3701 or fill out our contact form today to make an estate planning consultation.