In any comprehensive estate plan, a letter of instruction (LOI) is an important component. An…
Choosing a Trustee? 3 Common Misconceptions You Should Know Before Deciding
** This article has been revised from its original version which was published on May 18, 2017.
As time goes on, many of our clients see the value of creating trusts to protect family members such as a spouse, children, or grandchildren. Trusts can be used to protect a spouse with failing health. Some are used for a loved one with special needs or to protect assets for a child with credit or marital problems. Others focus on minimizing estate taxes. A trust attorney or estate planning attorney in New York can set up your trust according to your goals.
Appointing an Estate Trustee is One of the Most Important Decisions You Will Make
While our clients understand the value of establishing trusts, they are also concerned with naming the right trustee to handle the responsibilities required during trust administration.
We discuss these common choices for trustees with our clients:
- A family member
- A friend
- A professional trustee, such as an attorney or accountant
- A corporate trustee, such as a bank or trust company
As you consider the pros and cons of each choice, be sure to keep the following common misconceptions in mind.
1. Choosing a Professional Fiduciary to Handle my Estate May Cause Turmoil in My Family
After assigning a trustee, you and your family should have peace of mind, not anxiety. Professional trustees understand that giving someone else control of your assets can be concerning. When someone chooses to task our trust attorneys and estate planning attorneys in New York with the responsibility of handling estate administration, we clarify our experience and the type of services we can provide. Additionally, when we execute our irrevocable trusts, we give you the freedom to replace your trustee at any time.
2. Professional or Corporate Trustees are Expensive and Family Members can Serve for Free
Serving as a fiduciary takes time and effort. It’s also a potential liability, as beneficiaries can hold fiduciaries personally accountable if they don’t perform their duties properly. Being a trustee is a job.
Because of this, trustees are entitled to receive “reasonable compensation” for their services. Whether a family member or friend asks for compensation is another story. Fees may vary depending on the size or complexity of the trust; however, whether an individual or company is assigned, the entitlement to compensation still holds.
Even when an individual is willing to waive their right to compensation, there are other “costs” to consider. This appointed individual might have to make sacrifices to find the time to perform their duties as fiduciary.
They also must accomplish many different services and duties. An individual rarely has prior experience as a fiduciary or expertise in handling investments, record keeping, and general trust administration responsibilities. They will have to outsource these tasks. When working with a professional, they either have the help of staff or partner with trusted experts.
Finally, we have often witnessed disappointments when a family member or friend intends to forgo their compensation and their circumstances change. The individual recognizes the level of sacrifice they’ve made or experiences changes in their financial situation. Compensation suddenly becomes an issue. Often this causes the undermining of lifelong friendships and may even lead to lawsuits.
3. My Trustee is on Good Terms with Everyone and can Keep Peace in Our Family
Business and personal relationships don’t always mesh. Consider carefully who you choose as a trustee or whether serving as a trustee of an estate. Although there are some personal aspects to the job, overseeing an estate or trust involves the management and distribution of property. In some circumstances, selecting a family member as trustee of an estate can be disastrous.
Legal confrontations among family members are more common than many people think. For example, if a house is sold to a related party, investments seem to be allocated incorrectly, or distributions don’t seem fair and equitable, the only way to settle an argument and protect a beneficiary’s interest may be to hire trust attorney or estate planning attorney in New York.
For these reasons, and to keep peace in the family, we would suggest looking for a fiduciary who is experienced, competent, able to provide transparency, and respects the rights of beneficiaries as outlined in the law and the trust document.
Making Your Decision
Ultimately, selecting a trustee is a personal decision. If available, an individual fiduciary may be the most appropriate, depending on the complexity of your estate. However, it’s important to consider whether the fiduciary will be equipped to handle the amount of time and effort needed to oversee the estate or trust. Also, consider whether you’re confident you can avoid turmoil among family and friendships.
When making your decision, keep these trustee responsibilities in mind:
- Overseeing business interests
- Keeping records
- Paying expenses
- Safeguarding and distributing assets
- Managing liquidity needs
- Managing investments
- Maximizing government benefits, if appropriate
- Maintaining and selling real estate
- Resolving beneficiary disputes
- Paying expenses
- Accounting to beneficiaries
- Valuation of assets
- Communicating with attorneys, accountants, insurance agents, and other professionals
Russo Law Group, P.C. is committed to ensuring your wishes are fulfilled, your legacy is preserved, and your beneficiaries are protected. Learn more about our estate and trust administration services.
When implementing an estate plan, consulting with and retaining experienced estate planning and trust attorneys is essential. The knowledgeable and compassionate team at Russo Law Group, P.C., provides professional services and advice regarding living trusts, asset protection, and estate taxes. Take advantage of our comprehensive website as well as our free seminars and webinars to learn more about how Russo Law Group, P.C. provides peace of mind. Please contact our law firm to speak with one of our experienced trust attorneys today at 1 (800) 680-1717.
This Post Has 2 Comments
Thank you for suggesting that your trustee should be on good terms with everyone in your family. Hopefully, people are doing their research before they hire a trust attorney and find someone they will work well with. I’ll have to make sure that when the time comes I find the best lawyer possible.
I didn’t realize that, when choosing a trustee, hiring a professional can actually help to decrease stress in a family. It makes sense that a larger estate would require someone who understands how to pay debts and distribute money. This makes me wonder if there is a trust advisor service that you can hire so your family members can receive tips and guidance but still be the appointed trustee.