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Who Should I Choose for my Trustee?

trustee

Many people include one or more kinds of trusts in their estate plans, especially the common revocable living trusts. When a grantor creates a trust, he or she also needs to name at least one trustee. Depending on the kind of trust, it may make sense for the settlor to name him or herself as trustee. However, even if grantors name themselves as trustee, they will still need to name someone to be the successor trustee. In other words, another person needs to be named in the event that the grantor trustee dies or becomes incapacitated. There is always a risk that the original trustee will become incapacitated or die, so you will also want a backup trustee in case either of those things happen. Choosing a trustee or a successor trustee is important. It becomes even more important if the trustee has a lot of discretion over trust distributions. Either way, there are qualities that you should look for when you think about who to name as trustee.

How Much Power Do Trustees Have?

The amount of discretion and decision making power that a trustee has is completely dependent on the trust itself. Some trustees have very little decision making power and just make sure the trust is being managed in accordance with the grantor’s instructions. Two of the main areas of trust decision making are the investments and the distributions. Investments are where the assets will be kept, and distributions are related to how much is given out, when and to whom. You will want to take into account the kinds of decisions that will need to be made when deciding whom to appoint to make those decisions.

Family Members as Trustees

There are many reasons why it makes sense to have a friend or family member to be a trustee. One of the biggest reasons is that they understand family dynamics and may have intimate information about the lives of the beneficiaries that they can use to make decisions. However, family members are typically not experts. Family members are also humans who may die or become incapacitated and therefore need to be replaced.

Institutional Trustees

Institutional trustees like banks can be a good choice if you do not have any family members who want to be trustee, or if you do not have anyone you can trust. Banks are overseen by regulators and must follow certain protocols.

The Villages Trust Administration Attorneys

Trust administration is an important and often in depth process. If you name a friend or family member as trustee or successor trustee, you will likely want to also have the assistance of knowledgeable trust administration attorneys to help your loved ones understand the legal rights, responsibilities, and other considerations of trust administration. Our experienced trust administration attorneys at Millhorn Elder Law Planning Group located in The Villages can help you with all of your trust administration needs.

Resource:

http://www.americanbar.org/content/dam/aba/migrated/publiced/practical/books/wills/chapter_10.authcheckdam.pdf

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