Creating a comprehensive estate plan typically requires the use of a wide variety of estate planning tools, documents, and strategies. One of the more common additions to an estate plan is a trust. Although once used almost exclusively by wealthy families as a way to pass down the family fortune without paying taxes on the transfer of wealth, trusts are now frequently found in the average estate plan. If you decide to include a trust in your estate plan you will need to make a number of important decisions during the creation of your trust. By far, one of the most important of those decisions is who to appoint as the Trustee of your trust. One option is to appoint your Beverly trusts attorney as the Trustee of your trust.
At their core, all trusts are fundamentally the same. 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. The beneficiaries of a trust may be current and/or future. The trust itself may be a testamentary trust or a living trust. A testamentary trust is a trust that does not activate until the death of the Settlor while a living trust, as the name implies, activates during the lifetime of the Settlor. Living trusts can be further divided into revocable and irrevocable trusts. Testamentary trusts, however, are always revocable since they do not activate until the Settlor’s death. All trusts require a Settlor to create the trust and at least one beneficiary to benefit from the trust. All trusts must also have a Trustee to manage the trust assets and oversee the administration of the trust terms.
Choosing Your Trustee – Should a Beverly Trusts Attorney Be Your Trustee?
One of the most common mistakes people make when they establish a trust is failing to fully understand the duties and responsibilities of a Trustee. All too often a Settlor simply appoints a spouse, sibling, parent, or friend as the Trustee of the trust they create without stopping to consider whether or not the person is actually qualified for the position. Despite the name, the qualifications for a Trustee do not end with the able to trust the individual. You may be able to “trust” your spouse/friend/sibling/parent; however, that does not mean he or she has the experience and abilities necessary to manage your trust assets or oversee the terms of the trust you create. Even a simple trust typically requires the Trustee to understand basic financial and investment concepts and strategies because the Trustee is responsible for making investment decisions. In addition, the job of Trustee entails administering the trust terms – a job that frequently requires at least a rudimentary knowledge of the law and the ability to understand how various state and federal laws will impact the trust. The consequences of appointing a Trustee who is not truly qualified for the position can be disastrous. A trustee who lacks financial acumen can deplete the trust assets in no time at all by making poor investment decisions. Likewise, a Trustee who does not understand the law can quickly have the trust in trouble with the IRS or with various other state or federal agencies and authorities. Ultimately, appointing someone who really isn’t qualified as your Trustee will cost your trust in terms of both time and money, and could even lead to the complete failure of the trust.
One way to dramatically decrease the risk of failure is to appoint a professional Trustee for your trust. A Beverly trusts attorney is one option. Not only will an attorney have a thorough understanding of the laws and how they apply to your trust, but an attorney also understands the overall duties and responsibilities of a Trustee better than most people because your attorney actually created the terms that are to be used by the Trustee to administer the trust.
For more information, please join us for one of our upcoming FREE seminars. If you have additional questions or concerns regarding the appointment of a Trustee or creating a trust, contact the experienced Massachusetts estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.