It may be crunch time when you and/or your spouse are at your estate planning attorney’s office. After all, you’re planning for what happens when you die. For most people, it’s a process filled with emotions and what-ifs.
You have to pick some people to help you out after you’re gone. In your will, you need to pick an executor, a guardian (if you have children) and a trustee. If you have a revocable or irrevocable trust, you need to designate a trustee, because he or she will control everything.
Wealth Advisors’ recent article, “Picking a Trustee – 4 Easy Steps,” explains that a trustee follows the instructions of the trust document. A trust can be created in your Will when you die and/or in a separate trust document while you’re alive. Either way, selecting a trustee is critical. A trustee has considerable authority, including:
- The amount of money and when people receive it from the trust;
- The investments allowed in the trust;
- The ways to insulate the trust assets from bad people; and
- Other complex trust accounting and administration rules.
You have two ways to go as far as choosing a trustee: an individual person or a trust company. Either one could be right for your situation, so there’s no one formula for a perfect trustee. However, there are a few differences between designating a person and a trust company as trustee, including the following:
- An individual won’t charge a fee as trustee, while a trust company does.
- An individual can abscond with trust assets, while a trust company has checks and balances, along with insurance.
- An individual may let his own personal judgment get in the way of objectivity with beneficiaries, while a trust company legally can’t.
- An individual will get older and may get sloppy with the trust rules; that is far less likely to happen with a trust company.
- Trust rules, taxes and laws change, and a trust company’s focus is on those changes.
Ask your estate planning attorney for advice on your options when it comes to choosing a trustee to manage the trust.
Reference: Wealth Advisors (November 19, 2017) “Picking a Trustee – 4 Easy Steps”