Your Last Will and Testament will likely serve as the cornerstone of your estate plan; however, if you create a more comprehensive plan, you will undoubtedly include additional estate planning tools and strategies. One of the most common of those estate planning tools is a trust agreement. Trusts have become increasingly popular in recent years due, in large part, to the flexible nature of the trust and the numerous estate planning goals that can be achieved using a trust. If you are contemplating the addition of a trust to your estate plan, be sure to avoid making a common mistake – appointing the wrong person as your Trustee. People frequently appoint a spouse, family member, or friend as their Trustee without taking the time to consider if the individual is best suited to be a Trustee. To help you avoid making this common mistake, the Lincolnshire trust administration lawyers at Hedeker Law, Ltd. offer tips for choosing a Trustee.
At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. A testamentary trust is one that activates upon the death of the Settlor via a provision in the Settlor’s Last Will and Testament in most cases. A living trust activates as soon as all formalities of creation are in place.
What Does a Trustee Do?
Creating the right terms in your trust is certainly imperative; however, appointing the right Trustee is equally important because your Trustee administers those trust terms. Along with administering the trust, your Trustee will be responsible for managing and investing your trust assets. Depending on the terms you create, your Trustee may also be responsible for making discretionary decisions regarding the investment of trust assets and/or the distribution of those assets. The individual you choose as your Trustee will play a huge role in the success, or failure, of your trust.
Tips for Choosing the Right Trustee
Instead of simply choosing someone you “trust” to be your Trustee, take the time to consider the following tips before making your decision. Choose someone as your Trustee who:
- Has legal and/or financial experience. Many of the tasks of a Trustee involve understanding complex legal and/or financial concepts.
- Is available. 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.
- Does not have a conflict. 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.
- Lives close 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.
- Is experienced in conflict resolution. 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.
- Is a professional. Sometimes, appointing a professional Trustee is your best choice. Appointing a professional ensures that the trust will be administered properly and it avoids even the possibility of a conflict of interest.
By taking these tips into account when you appoint your Trustee you will avoid the mistake so many people make of appointing the wrong person for the job.
Contact Lincolnshire Trust Administration Lawyers
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns regarding trust administration, contact the experienced Lincolnshire trust administration lawyers at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.