If you have assets, you may have considered setting up a trust. A trust can ensure that your money is distributed the way you'd like it to be long after you're gone. The trust may benefit your children, grandchildren or any other loved ones.
When you set up a trust, you will need to select a person or entity responsible for administering your estate after you die. That person - it could be a family member, an attorney, a bank or another entity - is known as a "trustee." And choosing the right trustee is a critical part of estate planning.
What are the benefits of choosing a spouse or child as trustee?
Some people name a spouse or child to act as trustee. According to a Kiplinger article, there are pros and cons to picking a close family member. While they may understand the unique dynamics of your family and the needs of the beneficiaries, your spouse or child may not have trust experience. They may abuse the trust through ignorance and will be liable for any substantiated damages. There's also the risk of generating resentment among family members when you pick one person over another.
On the other hand, a family member generally does not charge administrative fees, which you will likely have to pay by naming someone outside of the family.
Should I choose a bank or trust company?
By choosing a corporate trustee such as a bank or trust company, you may reduce tension and conflicts among family members. They can act independently and have experience and processes in place to handle your assets in a fair and consistent manner.
However, corporate trustees will likely will need to invest time to understand your family's needs. Unlike a spouse, child or sibling, the bank or trust company may not fully realize your goals.
Corporate trustees typically charge between 1 and 1.5 percent of trust assets as an annual administrative fee.
How can an attorney, accountant or other trusted adviser help?
You can name your attorney, accountant or even a financial adviser as a trustee. At Hocker & Associates LLC, our estate attorneys have experience acting as trustees. We have valuable skills and training in all aspects of estate planning. Many of our clients have trusted, long-term relationships with us and ask us to serve as trustees.
However, we will need to determine any potential conflicts of interest and address any ethical considerations before taking on the role as trustee.
You also can ask an accountant or financial adviser to serve as trustee. As with hiring a corporate trustee, your accountant or financial adviser may not fully know the dynamics of your family. You also should ask about the person's experience as a trustee. You also should inquire about their fees, which may be even higher than the fees charged by a corporate trustee.
With so much at stake, it's wise to contact an experienced lawyer when choosing your trustee. We can help you make the choice that best for you and your family. Contact Hocker & Associates LLC, your lawyers for life.