An important element of a good estate plan is a trust. A trust is a legal device in which property is safeguarded and managed by one person or entity, the trustee, for the benefit of another person, a beneficiary. The beneficiary is usually a family member. There are many reasons to create a trust. A common reason to create a trust is to protect the assets in the trust from unnecessary taxation or Medicaid spend-downs and liens.
A trust is created by a trust agreement. This agreement lays out the rules for the trust and provides guidance to the trustee. Clearly, choosing a qualified trustee is important because the trustee must be able to understand your instructions and goals as well as properly protect and grow the assets in the trust. There are three main types of trustees: an individual trustee, a corporate trustee, or a combination of the two. Each option has its own advantages and disadvantages, so it's important to weigh your options carefully before making a decision.
Individual Trustee
An individual trustee is usually a family member or close friend. The advantage of an individual trustee is that they can provide personal care and attention to the beneficiary. The disadvantage is that an individual may not have the time or expertise to manage the trust effectively.
Corporate Trustee
A corporate trustee is usually a bank or another type of financial institution. The advantage of a corporate trustee is that they have the experience and resources to manage the trust efficiently. The disadvantage is that they may not be as responsive to the needs of the beneficiary as an individual would be.
Combination Trustee
A combination trustee is either two individuals or one individual and one corporation working together. The advantage of this option is that it provides the benefits of both an individual and corporate trustee. The disadvantage is that there may be conflicts between the two parties involved in managing the trust.
Consider Their Qualifications
Once you've considered your options, it's time to start narrowing down your choices by looking at the qualifications of potential trustees. Here are some factors you should take into account:
-Financial Responsibility: Can the potential trustee handle finances responsibly? Do they have experience managing money?
-Organizational Skills: Is the potential trustee organized and capable of keeping track of paperwork?
-Communication Skills: Can the potential communicate effectively with both you and the beneficiary?
-Trustworthiness: Is the potential trustworthy? Can they be relied on to make decisions in the best interest of the beneficiary?
Making Your Decision
After you've considered all of these factors, you should have a good idea of who would make a qualified trustee for your estate. Once you've made your decision, be sure to put everything in writing so there are no misunderstandings down the road.
Conclusion:
Choosing a trustee for your estate is an important decision that should not be taken lightly. Be sure to consider all factors carefully before making your choice. By following these tips, you can rest assured knowing that your loved ones will be taken care of according to your wishes.
