Fundamentals of Estate Planning: Naming a Trustee

A trust is the central legal tool used to provide the flexibility and protection most residents use when planning for their long term financial, inheritance, and health care needs. There are many different types of trusts which provide different benefits to residents; each type comes with its own rules. However, one common theme is that the when creating a trust a trustee must be named. Deciding upon the right trustee in your case is crucial to ensure that things proceed as you intend when you are gone.

The exact role of a trustee varies, depending on the long-term plans of the individual who creates the trust. Yet, in general the trustee will manage the assets and make distributions from it according to predetermined rules and wishes. Some trusts will last for decades, and so the choice can truly can set the course for one’s long-term legacy.

A Wall Street Journal post this week touched on the importance of the trustee selection topic, and provided a list of key factors that should influence the final decision, including:

-The total amount of assets in the trust. The larger and more complex the trust, the more important it is to have a trustee who understands investments principles, tax laws, and other complex financial matters. Individual trustees, like family members, might be a good option when the trust is smaller.

-The type of trust. The longer the trust is likely to last, the more benefit of having a professional trustee. For example, a trust designed to create a legacy that lasts for years is well-served by having stable, experienced professionals at the helm to ensure mistakes are not made and wishes are carried out over a prolonged period of time. Professional trustees can generally provide more long-term consistency than an individual trustee who may face changes throughout their own lives which affect their ability to manage the trust indefinitely.

-Relationship with beneficiaries. In some cases, a trustee is placed in the middle of a battle between competing (or feuding) beneficiaries. The more harmony in a family, the less complexity a trustee might face. However, it is an age-old reality that bickering between family and friends often arises where it never existed before following a death. In many cases it is best to plan for possible disagreement when there is even the smallest chance that it might arise.

No single answer applies to all New York families when deciding who to select as a trustee. But, not matter what, the choice should only be made after fully thinking through all of the issues that affect the decision and understanding the risks and benefits of every possibility.

See Our Related Blog Posts:

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New York Estate Planning Attorneys on the Funding of Trusts

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