Some clients are not especially close to their families. They might respect their moms and dads, but they have a strained relationship. It's not uncommon for siblings to drift so far apart emotionally that they feel like strangers at family gatherings.
If a client is unmarried and doesn't have a significant other or a close friend to name as trustee, then choosing among relatives presents a really tough problem.
What advice can we give clients struggling to pick someone from among family and friends as an after-death or disability trustee?
"Then, choose the least evil one."
It might sound flip, but this is what we sometimes tell clients that can't seem to settle on a name. If no one seems perfect for the role, then choose the one that comes closest.
While a client's older sister might not be his favorite relative, she might be the most logical choice - or "least evil" - close relative to handle his affairs compared to his other relatives and friends. It's also okay to choose a cousin with finance experience over a brother that can't seem to keep a full-time job. Or, maybe a client's youngest adult child has proven himself as more responsible and reliable than the client's eldest child.
Duties of a Trustee
Before choosing a trustee, we explain to clients the fiduciary duties of the trustee, which includes managing assets in the trust in the best interests of beneficiaries and making decisions regarding how assets are invested or released.
Clients need assurances that the trustee is a responsible person who will carry out their wishes, make sound judgments and seek out professional advice when necessary.
A good choice as trustee:
• is competent to handle finances and will follow the trust's instructions
• has adequate time and a genuine interest to take on the role
• will avoid family conflicts by being unbiased and unemotional when making decisions
Consider a Professional Advisor
While typically, this role is assigned to a spouse or relative, a client can also name a close friend, business associate, estate planning attorney, professional advisor, or a corporate fiduciary. Sometimes, co-trustees are chosen from a combination of these candidates.
Some trusts are complex or may be designed to benefit heirs for many, many years to come. Banks and trust companies are regulated by the government and can manage Trusts for decades. Their advantages include:
• they don't die or become incapacitated
• they act objectively in following a trust's instructions
• they keep good records and have estate administration, tax, and investment expertise
Regardless of who the client chooses, the basic qualities of a good trustee are the same: integrity, good judgment, and objectivity.
To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.
