What to consider when choosing a trustee
A trust provides you with enhanced control and protection over your hard-earned assets. Notably, a trust can protect your assets from risks like divorce, creditors, federal estate taxes and more.
However, you must choose another to oversee and administer the assets within the trust. Choosing your trustee can be a complex decision. You must consider family dynamics, personal attributes, financial literacy and more. Forbes outlines several considerations for identifying a trustee:
Think beyond your spouse or oldest child
While your spouse or oldest child may be a natural choice, carefully consider family structure and dynamics. In blended families, choosing your spouse or child can lead to complications among a stepparent, stepchildren, stepsiblings and more.
Other factors to consider include:
Age. Your spouse may be of similar age to you, which could result in similar health issues and the risk of diminished mental capacity.
Location. When some family members or beneficiaries live near the trustee, others outside Tennessee may feel they are at a disadvantage.
Capability. Your spouse or child may lack the financial responsibility or even interest to manage and administer the assets of a trust.
Family dynamics. Consider whether your prospective trustee could separate their personal feelings or interests to fulfill their duties.
While you may feel confident in your spouse’s or child’s ability to carry out their duties as a trustee, don’t hesitate to look beyond these choices.
Analyze financial capabilities
Much of a trustee’s responsibilities revolve around financial tasks and duties. They must be able to oversee the assets of the trust, manage the stock portfolio, distribute financial disbursements according to the terms of the trust and more.
You may choose more than one trustee
According to Kiplinger, choosing more than one trustee may help to offset any doubts you may have on an otherwise ideal trustee. Splitting the role among co-trustees can balance duties, liabilities and key tasks.
Don’t rule out a professional trustee
While it may seem expensive or unnecessary, in some situations, choosing a professional or corporate trustee can sidestep worries over family dynamics. This individual can provide sound financial decision-making and the experience necessary to effectively manage the trust according to your terms.
Choosing a trustee can be challenging. Take the time you need to make your decision and communicate this with your chosen individual to allow them the courtesy to consider taking on such a substantial responsibility.