One of the most popular, and versatile, estate planning tools is a trust. A trust can help you achieve numerous estate planning goals, including asset protection, incapacity planning, probate avoidance, and long-term care planning, among others. No matter which type of trust you choose to include in your estate plan, you will need to appoint someone as the Trustee to administer the trust. Because your choice of Trustee will greatly contribute to the success, or failure, of your trust, you may find the following advice on choosing the right Trustee for your Waukegan trust administration helpful.
What Is Involved in Trust Administration?
The overall purpose of a trust is to hold assets of the Settlor’s (the person who created the trust) to be used for the benefit of a third party (the beneficiary) at some point in the future. In the meantime, someone must administer the trust. The Trustee is the person appointed to do just that. In general, trust administration refers to the Trustee’s job of managing, protecting, and investing trust assets and carrying out the terms of the trust created by the Settlor.
Factors to Consider When Choosing a Trustee
When you finally sit down to think about who to appoint as Trustee for your trust, it helps to have some factors in mind with which to evaluate candidates. Although you may add additional factors, the following list is a good place to start:
- Legal and/or financial experience. Many of the tasks of a Trustee involve understanding complex legal and/or financial concepts. Ideally, your Trustee should have prior experience in one, or both, fields and/or a working knowledge of the concepts involved.
- Availability. This may seem obvious, but people often fail to discuss the appointment with their intended Trustee. When it comes time to administer the trust, the individual does not have the time, has moved away, or has personal/medical issues that prevent him/her from fulfilling the duties of a Trustee.
- Willingness to serve. Never assume that someone is willing to take on the job of Trustee, even if they are a family member or close friend. It is a big job and may be too much for some people. Always sit down and discuss the position with a prospective Trustee before appointing someone as your Trustee.
- Conflicts with beneficiaries. Appointing a family member can create conflicts if the beneficiaries of the trust are also family members, particularly if the Trustee has discretionary powers under the terms of the trust.
- Geographic proximity to trust assets. If you include real property among the trust assets, it is best to appoint a Trustee who lives close enough to keep an eye on the property instead of relying on someone else to do so.
- Conflict resolution experience. Conflict among the beneficiaries of a trust is common. Appointing a Trustee who is skilled at conflict resolution will often result in avoiding costly litigation.
3 Important Questions to Ask When Deciding on a Trustee
To help make the right decision when appointing a Trustee for your trust, ask yourself the following questions::
- How complex is my trust? A trust agreement can be extremely simple or unbelievably complex. The value and complexity of the assets you plan to transfer into the trust, the number and type of beneficiaries, and the details of the trust terms should all be taken into account when evaluating how complex your trust is. The more complex the trust, the more important it is to appoint a Trustee with the skills, education, and experience needed to administer the trust.
- What is the nature of the trust? If you are creating a revocable living trust for incapacity planning purposes, for example, you will be able to oversee the trust administration yourself and have the ability to modify the trust, if need be. If, however, you are creating an irrevocable trust, or a testamentary trust, your ability to make changes or fix errors is non-existent. Therefore, appointing a competent and experienced Trustee becomes even more important.
- Do I need a professional Trustee? Given the numerous duties and responsibilities of a Trustee, and the level of financial and legal knowledge necessary to successfully administer a trust, many people choose to appoint a professional Trustee instead of taking a chance on a non-professional.
Contact Waukegan Trust Administration Attorneys
Please plan to join us for one of our FREE estate planning seminars. If you have questions or concerns regarding trust administration in the State of Illinois, contact the experienced Waukegan trust administration attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.
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