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Tips on Choosing the Right Trustee

How To Choose Your Trustee

The final decision of who will be managing your Los Angeles estate when you’re gone is a huge one. While you might be tempted to just pick an old friend or relative, selecting a trustee should never be taken lightly. This person could be in charge of overseeing your assets and following your final wishes. From naming someone close to you to hiring an estate planning attorney, you have options. Of course, there are things to consider when selecting your trustee. Here’s what you need to know:

What is a Trust?

A trust is kind of like a bank account for your estate and assets. You - the trustor - create one or more of the many different types of trusts available. When you die, your assets are then transferred to designated beneficiaries according to your wishes. The person who oversees the trust is called a trustee.

Creating trusts in your estate plan has many benefits:

  • Your estate can avoid probate. Probate is when a court decides how someone’s assets are distributed. There are various state laws that can dictate how probate judges rule. Your trustee can distribute your assets without requiring court intervention. This means everything happens faster with fewer expenses.
  • While it may cost a little more to create a trust in Los Angeles, CA, it will ultimately save money in the long term. Assets in a trust are often excluded from taxes and don’t require probate costs.
  • Trusts also help protect your privacy. The probate process is public record so anyone can learn the details about your estate. A trust is a private process where only those involved know the details.
  • If the trustor is incapacitated, the trustee can often step in and manage the estate right away. This helps expedite certain processes that would normally take longer to decide on.

Who Should Manage My Trust?

To make sure that your wishes are followed as planned, it’s crucial to select the right person to be your trustee. Legally, you can choose anyone that you want who is willing, but that doesn’t mean anyone is up for the task.

Here are a few standard options and what you should consider:

Spouse, Family Member, or Child

Your family members are the most likely to understand your needs and wishes. Selecting a family member means you’re likely to have a trustee who can make decisions more aligned with what you would want, especially if something unexpected comes up.

Another benefit of choosing a family member deals with costs to the trust. Most fees associated with managing a trust are charged to the trust itself. This is typical, regardless of who is managing things. A family member is less likely to charge administrative fees on top of regular expenses.

The downside of selecting a family member is that this person might not have experience managing a trust. While this doesn’t make them completely ineligible, it can cause problems. Relatives might, through ignorance, abuse the trust. Although they would, of course, be held liable for damages. Choosing one family member over another can also cause conflict within the family. This conflict can result in resentment that is not easily repaired.

Estate Planning Attorneys, Accountants, and Financial Advisors

Your Los Angeles estate planning lawyer, accountants, and financial advisors already have a relationship with you and your estate. These people understand your financial goals, and they typically have some experience or knowledge in managing an estate. Using a professional certainly makes sense to ensure your goals are always kept in mind.

The downside of using one of these professionals is that they often charge a higher administration fee than non-professionals might. Their understanding of trusts and the process of managing them is worth the price, but could reduce the overall estate value. The other issue to consider is if a legal or financial professional understands the dynamics of your family. You may not want someone who is more focused on the success of your business rather  than helping your family.

Banks and Trust Companies

Working with a bank or trust company, often called a corporate trustee, typically provides fiduciary services. That means they have procedures and systems in place to manage your estate in a consistent manner. These professionals are in the business of trusts, so they aren’t splitting their time between other tasks.

In terms of understanding your family and following your final wishes, corporate trustees are often the most far removed. Because they work with specific policies, they may not be able to follow the spirit of your requests to the letter.

Multiple Trustees

Some people decide to involve multiple people in managing their trusts. These co-trustees can be made up of family members, professionals, and corporate trustees. This allows you to have someone on the board who is closer to your family working with someone who understands managing trusts.

In some cases, a board of trustees may be a great deal of work and not worth the effort for a small estate. The merging of multiple people can also be complex, so it’s definitely not for the faint of heart.

Questions to Consider

Selecting a trustee is a massive undertaking. This person will manage your financial legacy and make sure that your final wishes are seen through. Here are some key questions you can ask yourself or potential trustees to ensure you make the right decision.

  • Can your trustee separate their personal feelings from the beneficiaries?
  • Will your trustee treat all of your beneficiaries fairly?
  • Can your trustee analyze and understand investments?
  • Will your trustee have the necessary time to commit to managing your trust?
  • Does your potential trustee have experience?
  • Will your trustee take the time to understand your wishes, family dynamic, and the needs of everyone involved?
  • What will the trustee charge for their services?

Making the Right Decision

Out of all the things you should be considering, the most important one is this: Don’t put off choosing a trustee because it’s hard to decide. Take the time that you need to make the right decision. Contact us to set up a meeting with your local Los Angeles estate planning attorney to go over your options. Not only can an estate planning lawyer help you set up your trusts, they can also advise in actually selecting a trustee.

Thomas McKenzie Law
Estate Planning Attorney in California. Full-service law firm specializing in estate plans, wills and trusts, long-term care, and financial consulting. Thomas L. McKenzie received his Juris Doctor degree from Western State University College of Law, in Fullerton, California. While working full-time at night and attending full-time daily classes, Tom graduated law school with honors in 1993.

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