Home Guides & Resources chevron_right Financial Planning chevron_right Estate Planning 4 Things to Consider When Choosing a Trustee Published December 24, 2020 TrustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process. can be a great way to protect your assets and transfer wealth to family members and charitable causes. But it’s how those trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process. are managed that really determines their efficacy. To ensure your intentions are honored, you’ll need to make sure you select the right trustee—someone trustworthy, prudent and agile enough to respond to your beneficiaries’ needs promptly over the course of their lives. For a revocable or living trustA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., ensuring the funds are in the right hands is simple: You can designate yourself as the trustee. Irrevocable trusts (or revocable trusts whose grantorThe creator of a trust who owns the assets to be transferred. has passed away) can be a different story. TrustA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process. documents can spell out most powers but aren’t meant to anticipate every scenario that trustees or beneficiaries might come across. Here are four critical questions to consider to help you choose the right trustee. What does the trustee do? Trustees have oversight over all property held by the trust and have the power to make investment decisions about cash or securities as well as managing businesses or real estate held in trust. They are also responsible for filing tax returns and distributing payments to beneficiaries. A trustee is legally liable for their actions, so they’ve got skin in the game. In short, being a trustee can be a full-time job, so whomever you pick should understand the commitment involved. Do you need a professional trustee? The answer to this question depends on your estate and your beneficiaries. Professional trustees can include a financial institution, like a bank, or advisers with significant experience serving as trustees. These trustees have the resources and technical know-how to properly administer trusts and can help provide continuity, objectivity, operational knowledge and consistency, serving several generations of a family. But they might be less familiar with the personal needs of your family and less flexible when making distribution decisions.Individual trustees are generally family members or friends whom the donor trusts to understand and carry out their intentions. Family trustees may need to engage investment advisers and other professionals to fulfill their fiduciaryA person or organization who manages assets for a third party, and is legally bound to act in the best interests of that third party, putting the third party’s interest before their own. duties. If you have an individual trustee in mind, it might make sense to also appoint a professional co-trustee to handle logistics. What is the trust’s timeframe? Trusts can be set up to last for decades. Or they may terminate upon the passing of a spouse or child. If you’re setting up a trust to benefit several generations, you may need to select a professional, institutional trustee to ensure continuity. But even if you intend the trust to dissolve in the short or medium term (say, when a minor child becomes an adult), it’s still wise to provide instructions on how future beneficiaries should pick (and potentially remove) future trustees in case your designated trustee resigns or becomes incapacitated. Will the trustee be paid? Trustees are legally entitled to reasonable fees for their services and professional trustees will often have fee schedules you can compare. Generally, the more complex your trust is to administer, the higher the fees. If your trust is relatively simple with few beneficiaries, an individual trustee might be a better option. Their fees might be lower or even limited to expenses that they incur for their work on the trust. Naming a trustee who is knowledgeable, reliable and can navigate your family’s dynamics should ensure that your goals are achieved and that your heirs are cared for as intended. Our estate, tax and financial planning specialists can help walk you through this process. Please don’t hesitate to contact your wealth management team; we’re always happy to help. About Adviser Investments Adviser is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). 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