Estate planning is often a daunting task, as you are choosing the ways in which your estate and your legacy will evolve after your passing. A vital step in estate planning is choosing the right trustee to oversee your posthumous affairs and execute your wishes as described in the various documents attached to your estate. Depending on the laws of your state, a trustee’s responsibilities may include acting impartially when dealing with the interests of both current and future beneficiaries, properly accounting to all beneficiaries, and responsible investment and dispensation of trust funds. The result may be a heavy load of responsibility, lasting for years to home. This leads us to the central question of how to choose the right trustee. There are a number of factors to consider in making that selection, and herein we hope to guide you through them.
An obvious and popular choice of trustee is a member of the family, particularly a surviving spouse or adult child. There are several good reasons for this: your family members are most likely to be the beneficiaries of your estate, they most often engender trust and reliability, and they’re known to you. That having been said, not all families or family members are created equal, and their character should be weighed accordingly when considering them as a trustee. There are many questions to consider before selecting a given family member:
- Is this person able to separate their personal feelings and interests from those of the beneficiaries and exercise good judgment at all times? IE, will this person treat everyone involved equally and fairly?
- Does your trustee have the knowledge and experience to analyze and manage investments and investment opportunities?
- Is your trustee prone to risk-taking behavior, particularly when it comes to money?
- If the trustee is your spouse or partner, what happens when and if they remarry?
- If the trustee is your child, are they able to deal with other family members in a fair and equitable manner? IE, will sibling rivalry come into play at some point and wreak havoc?
- Can your sons-in-law and daughters-in-law and their children cooperate with the rest of the family?
- Will your trustee have enough time to fulfill their duties to the estate while simultaneously dealing with their own family, career, and life?
We recognize that these are not easy questions, but they require a frank and honest review–brutally honest, even. An in-depth assessment of their honesty, reliability, good nature and ability are necessary before selecting them as a trustee.
Another option exists, which in the long run may be easier for all involved. An experienced financial advisor with a background in estate management may be a better choice. They bring experience, knowledge, and professional insight to the table. They are required by both law and the rules of professional conduct to act responsibly, and their duty is first to the estate rather than to any one individual. In many cases, a professional trustee will have been involved in planning your estate, giving them the personal knowledge to ensure that your wishes are carried out. Choosing a professional financial advisor as your trustee relieves a family member of a heavy burden at a difficult time, and can reduce stress and tension among the family as a whole.
Choosing the right trustee is an important step, requiring thought and insight, but it needn’t be an overly difficult one. By considering the right questions and evaluating your goals for your estate, you will be on the path to making the right decision.