In our previous post, we began looking at some things to take into consideration when selecting a person to manage trust assets. As we’ve already mentioned, the size and complexity of trust assets can be a large factor in determining who will be the best selection. Another consideration is whether any family members would be able to perform the task of managing trust assets.
A third factor to consider is the relationships between the beneficiaries of the trust. Typically, beneficiaries are family members. Where there are hard feelings or disagreements among family members who have an interest in trust assets, it may not be helpful to have a trustee from within the family. Estate owners that have been married several times may want to consider obtaining an impartial third party to act as trustee. This can help reduce the amount of fighting and litigation that takes place. Or, a corporate trustee is also an option.
A final suggestion for selecting a trustee is to explore a hybrid trustee arrangement. By this, we mean hiring a close friend or family member to act as trustee, but also hiring a professional-such as an accountant, attorney or corporate trustee-to help them with their duties. One could also appoint a professional as a co-trustee along with a close friend or family member.
In the latter arrangement, duties could be split various ways. For instance, the professional trustee could be made responsible for daily administrative duties, while the close friend or family member could have the task of managing investible trust assets. Or, the professional trustee could be responsible for investing assets while the close friend or family member could be responsible for paying money out to beneficiaries.
Whatever arrangement is selected, it is important to understand all the options and to pick the one that will make administration of the trust the most successful.
Source: Wall Street Journal, “A Matter of Trust,” Jeanine Skwronski, September 10, 2012.