If you choose to include a trust in your comprehensive estate plan you will need to appoint a Trustee to administer the trust. While this may sound like a simple task, choosing the wrong person to administer a trust can cause or contribute to the failure of a perfectly drafted trust agreement. Given the importance of choosing the right Trustee, the Beverly trust attorneys at DeBruyckere Law Offices help you decide who your Trustee should be.
What Is a Trust?
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. Trusts all fall into one of two categories – testamentary or living trusts. A testamentary trust is activated by a provision in the Settlor’s Will at the time of death whereas a living trust activates once all formalities of creation are in place and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts.
What Are the Duties and Responsibilities of a Trustee?
The details of trust administration are unique to the trust agreement; however, the overall job of a Trustee is to manage and protect the trust assets and to administer the trust using the trust terms created by the Settlor. Typically, a Trustee will be required to invest trust assets using the “Prudent Investor Standard.” In essence, that means that the Trustee must be more careful with trust assets than he/she would be with his/her own assets. In addition, a Trustee must communicate with beneficiaries, distribute assets, keep detailed records, and ensure that any taxes owed by the trust are paid.
How to Pick the Right Trustee
Appointing the wrong person as the Trustee is the most common mistake people make when creating a trust agreement. They focus on picking someone they trust and who is familiar to them instead of using objective criteria. Using that criteria might get you a Trustee who has your best interests at heart it won’t necessarily result in a Trustee who is competent and capable of successfully administering your trust agreement. To make the right choice, consider the following questions when picking a Trustee:
- Who has the skills and/or experience needed to administer a trust? A Trustee’s job involves investing trust assets and understanding the laws that apply to trust administration. Consequently, appointing someone with experience and/or skills in either field is wise.
- Who is willing and able to act as your Trustee? It’s amazing how often Settlers appoint someone to be their Trustee without discussing the appointment with them first. Before you seriously consider appointing someone, ask them if they are willing and able to serve. If the person has a conflict, doesn’t have the time to devote to serving, or simply isn’t interested in serving, you need to know that now.
- Who will respect your wishes? You need a Trustee who will not insist on injecting his/her opinion into decisions related to the administration of the trust. Make sure your Trustee will work diligently to fulfill your stated trust purpose, even if he/she doesn’t agree with the purpose.
- Who can act as Trustee without causing conflicts? Ideally, your Trustee should not have any conflicts with the trust beneficiaries. If the Trustee already has a significant personal relationship with a beneficiary, this can often lead to a conflict of interest and threaten the required neutrality of a Trustee.
- Who is good at conflict resolution? Because a conflict among the beneficiaries may arise at some point, picking a Trustee who can resolve that conflict without the need for litigation is always a wise idea.
Contact Beverly Trust Attorneys
If you have additional questions or concerns, please contact the Beverly trust attorneys at DeBruyckere Law Offices by calling our New Hampshire office at (603) 894-4141 or our Massachusetts office at (978) 969-0331 to learn more or visit our website at http://dadlawoffices.com.
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