Like many people, you may find yourself incorporating a trust into your overall estate plan. If so, you will need to make a number of decisions during the creation of that trust. Among the most important of those decisions will be deciding who to appoint as the Trustee of your trust. The Trustee contributes greatly to the success, or failure, of a trust which is why care should be taken when choosing a Trustee. The Lincolnshire trust administration lawyers at Hedeker Law, Ltd. offer some good factors to consider when choosing your Trustee.
What Is a Trust?
A trust is a legal relationship that involves one party holding property for the benefit of another party, or parties. The creator of the trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Settlor transfers property to a Trustee who is appointed by the Settlor. The Trustee is responsible for holding that property for the trust’s beneficiaries, also named by the Settlor. Trusts are first divided into two categories – testamentary and living trusts. A testamentary trust is activated by a provision in the Settlor’s Will at the time of death whereas a living trust activates once all formalities of creation are in place. Living trusts can be further divided into revocable and irrevocable living trusts. Because your Will can always be modified up to the point of your death, a testamentary trust is always revocable.
What Does the Trustee Do?
The job of a Trustee is far more complex than most people realize. The overall job of a Trustee is to protect and manage trust assets while administering the trust using the trust terms created by the Settlor. Within that general description, however, a Trustee has a long list of specific duties and responsibilities. This list includes everything from investing trust assets to keeping detailed records to resolving conflicts among beneficiaries. The reality is that a Trustee contributes directly, and critically, to the success – or failure – of a trust. Given how important the Trustee is to the ultimate success of your trust, care should be taken when deciding who to appoint as your Trustee. Instead of simply appointing a spouse, adult child, or close friend without thinking the appointment through, take the necessary time to really evaluate a potential candidate.
What Factors Should I Consider When Choosing a Trustee?
When you are considering an individual as a possible Trustee, take the time to consider how the following factors apply to your candidate as these factors are what make a great Trustee:
- Experience – experience in the financial and/or legal field will go a long way toward successfully administering a trust given that the Trustee’s job involves investing trust assets and understanding the laws that apply to trust administration.
- Conflict resolution – if your trust includes more than one beneficiary, a conflict among the beneficiaries may arise at some point. Having a Trustee who can resolve that conflict without the need for litigation is an excellent benefit to the trust.
- Conflict-free – at the same time, your Trustee should not have any conflicts with the trust beneficiaries. If the Trustee already has a significant personal relationship with a beneficiary, this can often lead to a conflict of interest that can harm the trust because your Trustee should remain neutral.
- Detail oriented – a Trustee is responsible for keeping detailed records of all trust business so appointing someone who has experienced with keeping similar records is always a plus.
- Respectful – can the individual respect your wishes? Will he/she work diligently to fulfill your stated trust purpose, even if he/she doesn’t agree with the purpose? If the answer to either question is “no” then you should reconsider your choice.
- Willingness – it is surprising how many Settlors appoint Trustees without first discussing the appointment with the Trustee. Always ask your future (hopefully) Trustee if he/she is willing and able to serve in that function before making the appointment official.
Contact Lincolnshire Trust Administration Lawyers
Please join us for an upcoming FREE estate planning seminar. If you have additional questions or concerns about choosing your Trustee, contact the experienced Lincolnshire trust administration lawyers at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.