Who Will Be The Trustee of Your Revocable Living Trust?

In a sense, choosing your trustee is one of the first and best advantages of establishing a revocable trust.  When you choose a trustee, you watch him or her administer your estate while you are living, lucid and in control of the situation.

Making the Right Decision about a Trustee for your Revocable Living Trust

The Right Decision about a Trustee will be the foundation of estate planning.  Articles on Revocable Trust, showing the advantages and disadvantages are in abundance.  Many over-look or gloss-over the significance of this decision.  There is a huge advantage of making it carefully.

Understandably, you must give such a choice your deepest consideration.  Therefore we feel justified in stating, the best possible trustee is one of the first of many advantages to the revocable trust.

Here in Sanford Florida, our own Shivon Patel, Esq., founder of Principal Law, is acutely aware of the significance of this choice.  And she has in fact written an article concerning this advantage. Thus, as in the past, this blog will feature several quotations from her own article, “The Importance of Choosing Your Trustee.”

Choosing a Trustee is not a Popularity Contest

Attorney Shivon Patel introduces the strategic choice of a trustee clearly to clients.  “Many people often decide to establish a trust to accomplish a myriad of estate planning goals.  The success of a trust, however, often depends on the abilities of the person, or institution, named as Trustee.  If you are creating a trust, you will want to choose your Trustee carefully.  Almost any adult can qualify to serve as a Trustee.  Therefore, the decision of whether to “choose a family member or corporate trustee can be one of the most difficult decisions to make.”(Again, we remind you that the majority of the quotations in this blog are directly from Shivon Patel’s written article.)

Crucial:  Select the Right Person for Your Trust

Trust is of vital importance in estate issues.  Therefore, she says “Choosing a family member as your Trustee is often the preference when establishing a trust.”  The first reason for this is obvious. “They are usually individuals with a personal knowledge of the Trust.”  And they “have a strong relationship with you and your beneficiaries.”

Secondly, “In addition, a family member may not charge trustee fees.”  And then she explains, “However, you need to consider more than a caring person when naming a Trustee.”  Often emotional attachment is the prime reason to elect an individual.  Shivon helps clients understand some of the responsibilities of that position:

The Often-Unknown or Un-named Duties of Your Trustee

Attorney Shivon Patel will inform trust planners, “Trustees have a variety of responsibilities, including:

1. investing the assets placed in the trust,

2. interpreting the terms of the trust,

3. making distributions to the beneficiaries,

4. keeping accurate and detailed records,

5. and filing tax returns.”

Could Your Son or Daughter Be Your Trustee?

Now, if you are thinking about a son or a daughter or a younger sibling as a trustee, you might need to think twice:

• Does your son or daughter possess these skills to enact the above list of jobs?
• Does your younger sibling have the time to devote to your trust?

In her article, Shivon reveals a fact about family-member trustees that might amaze you.  “Generally, individual Trustees are inexperienced in these matters and lack the necessary financial and legal knowledge to effectively manage your trust.  They often are in need of hiring professionals, such as lawyers, financial brokers, and CPAs, to help with the administration of your trust, which can eliminate any cost savings and reduce the amount your beneficiaries receive.”

Look For The Unexpected

Shivon reveals two unexpected and often unclarified facts of the matter,

1.  “Naming a professional advisor or bank or trust company as your Trustee may appear to be cost prohibitive…”  “Think about how much your family member will probably need to spend on hiring the right professionals to help with trust administration.”

2.   She carefully lists the benefits of choosing a corporate trustee over a family member for your estate.  “The advantages of utilizing a corporate trustee are that:

A. “They have the knowledge and experience to administer trusts.”

B.  She adds, “They operate in an unbiased professional manner.  And their main goal is to carry out the terms that you set forth while investing the funds to maximize the return based on the beneficiaries’ needs.”

C.  And she adds another important facet for your decision.  “Since the corporate Trustee is a corporation, they also have longevity.  You do not have to worry about naming multiple successors to ensure your beneficiaries do not outlive the Trustee.”

D.  Last but not least, you will need to consider human nature.  “The corporate Trustee has no immediate ties to your beneficiaries.”  Therefore “much of the emotional stress and strain that a family member may be subjected to… is eliminated.”

E.    And, unlike family members, Corporate Trustees are required to be licensed, bonded, and insured.  That means that they will be held to a very high standard of care.   This standard is “above and beyond what the average individual would be held to when managing your trust.”  You can find out more about this topic at the following online resource.

The Best of Both Worlds:  Family and Professional Co-Trustees

In conclusion, the ultimate decision is often reached after extensive thought.  “Many people now name Co-Trustees…”  This procedure provides their “family the advantages of a personal relationship and professional skills.”

On the one hand, “The corporate Trustee can handle the investments, taxes, and reporting duties.

On the other hand, “The family member can interact with your beneficiaries and respond to their individual needs.”

Principal Law points out the importance of this appointment.  “If you are planning to create a trust, naming the right Trustee is very important.  Your estate planning attorney can help you make the right choice for you and your family.”

As quickly as this decision is made, you realize that it is just the tip of the iceberg in estate planning.  But as we said in part I of our coverage about trusts, we’re providing it to you, dear readers, one bite at a time.

Thank you for reading the blog at Principle Law, and join us again for more advantages of the Revocable Trust and other legal news you can use.