Although a Last Will and Testament remains the most common estate planning tool, trusts have steadily increased in popularity over the last several decades to the point where it is now very common to find one in the average estate plan. There are numerous different types of trusts that help achieve a wide variety of estate planning goals. One thing that all trusts have in common, however, is the need to appoint a Trustee to administer the trust. To help ensure that you appoint the right person as your Trustee, a Waukegan revocable living trusts attorney at Hedeker Law Ltd. offers you some guidance when making your choice.
What Does a Trustee Do?
A trust is a legal relationship where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries, also named by the Settlor. The two primary functions of the Trustee are to manage and invest trust assets and to administer the trust using the trust terms created by the Settlor. Some of the specific duties and responsibilities of the Trustee include:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the “Prudent Investor Standard”
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Approving or denying distributions if given discretionary authority
- Keeping detailed trust records
- Preparing and paying trust taxes
Questions to Ask When Choosing Your Trustee
When you sit down to think about who to appoint as the Trustee of your trust, it helps to have some questions in mind with which to evaluate candidates. You may have additional questions that cover unique concerns you may have, but the following general questions should get you started::
- Does the potential candidate have any experience in the legal field? Many of the tasks of a Trustee involve understanding complex state and federal laws that apply to trusts. Ideally, your Trustee should have prior experience in the legal field and/or a working knowledge of the laws involved.
- Does the individual have experience in the financial field? As the Trustee, he/she will be responsible for investing and growing the trust assets. Make sure a candidate has the experience and/or education to be able to take on this responsibility successfully.
- Is the individual available to serve as your Trustee? Never assume that someone is available to serve as your 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.
- Is the candidate willing to serve as your Trustee? By the same token, don’t assume that someone is willing to take on the job of Trustee just because 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.
- Do you see any potential conflicts between the potential Trustee and trust 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.
- Does the individual live close to major 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.
- Do you feel the individual would be good at 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 which can drain the trust of assets.
Contact a Waukegan Revocable Living Trusts Attorney
Please join us for a FREE upcoming seminar. If you have questions or concerns regarding Waukegan living trusts, contact an experienced Waukegan living trusts attorney at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.