More and more people are choosing to include a trust in their estate plan. Trusts offer numerous benefits such as probate avoidance, tax benefits, and continued control over trust assets; however, these benefits are only available if the trust is managed properly. That, in turn, depends in large part on your choice of trustee. While it may seem a natural choice to appoint a family member as your trustee, you should ask yourself if this is really a wise choice.
Appointing a family member as trustee often brings with it some unintended consequences. While it is true that a family member usually understands the family dynamics better than a stranger, that can be a negative as well as a positive. An impartial trustee doesn’t always make the prudent choice if emotions are involved. Moreover, when a family member is appointed as trustee, it frequently causes strife and resentment within the family—something that can be avoided by appointing an independent trustee.
Along with the personal issues involved in appointing a trustee, you must consider the practical aspects. The job of trustee is more difficult than many people realize. It requires skill, knowledge and experience that a family member may not have. Protecting trust assets is the number one priority, but growing those assets is close behind. Unless your family member has a background in financial management, he or she may simply not be equipped to manage the trust property.
Before you make a decision on your choice of trustee, talk to your estate planning attorney about independent professional trustees located in your area.
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- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - October 26, 2023
- Understanding the Importance of the Simultaneous Death Act - October 19, 2023
