What Problems Can Arise When a Child Is a Trustee?

One major issue with appointing a child as a trustee is the inherent conflict of interest. A child trustee is also a likely beneficiary of your trust. While the trustee must be fair in administering the trust’s assets, a child trustee must balance that obligation with their own interests in the trust. Problems can occur even when the child trustee does not intend to prioritize their personal interests. The sheer potential for a conflict of interest may lead a child trustee to believe their decisions are fair when they are actually self-serving.

Additionally, if you have multiple children, appointing one child as a trustee can breed jealousy among siblings. Some clients wish to designate all of their children as co-beneficiaries to avoid this precise issue. However, appointing multiple child trustees can lead to problems with agreeing on the important decisions that the role of a trustee requires. In addition to these problems, biases may arise if a child must administer a parent’s assets to a stepparent beneficiary, with whom their relationship may be more fraught.

What Traits Should You Consider When Appointing a Child as Your Trustee?

If you are considering appointing your child as a trustee, a Colorado estate planning attorney can help you determine whether your child is capable of the role. First, an attorney can interview your child to determine whether they are physically available to undertake the responsibilities of administrating your trust. A child who lives closer to you may be in a better position to attend meetings with your attorney or representatives at your bank. In addition to location, a child’s financial health may speak to their competency as a trustee. If your child has not managed their assets well, chances are high that they will not manage your trust well either. On the other hand, a child with stable finances or a background in finance may be equipped to carry out the duties of a trustee. Finally, your attorney can screen for the potential issues described above. For example, an attorney can ask your child about their sibling relationships or their ability to be impartial when administering your assets. Based on your child’s responses, your attorney can help you determine whether your child should act as a trustee.

If your child is not well-suited for the role, you should consider appointing a professional fiduciary. A professional has no stake in the distribution of your assets, which avoids conflicts of interest or tension among siblings. Choosing a trustee is an important decision, and you should consider all options before appointing your child to handle your trust.

Speak With a Boulder, Colorado Estate Planning Attorney Today

If you have questions about planning a trust or appointing a trustee, contact the Braverman Law Group to learn more. The Boulder, Colorado estate planning lawyers at the Braverman Law Group can assist with planning your estate and protecting your assets. Our qualified attorneys and certified financial planners will help you understand the important considerations in selecting a trustee to competently administer your trust. For a free, no-obligation consultation with one of our estate planning attorneys, give us a call today at (303) 800-1588.

Important Factors for Choosing a Trustee

There are several important things to consider when assigning a trustee. Most people choose a friend, family member, attorney, or corporate trustee to oversee their assets. Before making the final choice, consider the following things: (1) The potential trustee’s availability, (2) their ability to be responsible, (3) their level of expertise, and (4) any costs associated with choosing that trustee. Weighing these factors is important and can have a big impact on your asset management in the future.

Availability

Make sure that you and the future trustee are on the same page when it comes to the time commitment involved with being a trustee. Depending on your assets and the structure and type of trust you utilize, serving as a trustee can be demanding. Trustees may be required to spend substantial amounts of time processing requests, mediating between parties, and making decisions regarding the trust. Not everyone has the time or ability to be fully available for such a process, and you don’t want that to negatively impact the running of your trust.

Responsibility

The role of the trustee is serious and involves significant influence over the trust. Trustees oversee the distribution of assets to beneficiaries. While some trusts provide specific instructions about the nature and process of distribution, it is often left up to the trustee to decide what is appropriate. Ensuring that the trustee you choose is responsible is of utmost importance for this reason. Trustees who have personal relationships with beneficiaries could struggle to make objective decisions. Trustees are often required to withhold funds from individuals, creating the potential for the relationship between the trustee and the beneficiary to suffer. Ensuring that the trustee is up to the task is very important.

Expertise

When it comes to managing trusts, individual trustees may have a wide range of prior experience. Making sure that your chosen trustee can handle the trust assets without making mistakes is important. Auditors do not review the decisions of individual trustees, and serious errors could remain undetected for years, culminating in heavy fines or lawsuits in the future. Institutional and corporate trustees are audited by internal auditors and government agencies to ensure compliance with procedures.

Potential Cost

Corporate trustees typically charge a fee that is equal to a percentage of the value of the trust assets. Individual trustees, such as family members or friends, often do not require a fee to manage trusts but may consult or hire estate planning professionals regarding their trustee responsibilities, adding to the cost.

Why Use A Trust?

Trusts are an increasingly utilized estate planning tool throughout the nation. Trusts offer several benefits when it comes to asset distribution. Trusts allow for great specificity regarding how, when, and to whom assets are distributed. Additionally, trusts come in a wide variety of categories and subcategories dedicated to particular estate planning goals, such as charitable giving or tax reduction.

A trust not only designates who may benefit from the funds or resources in the trust but addresses situations of incapacity, such as strokes, dementia, or Alzheimer’s. Those at risk of such circumstances may want to consider utilizing trusts to ensure that their resources and funds are preserved, managed, and spent in a manner that conforms to their wishes while in the care of loved ones or healthcare professionals.

Speak with a Boulder, Colorado, Estate Planning Attorney Today

Contact us for information about exploring trusts, trustee actions, and other estate planning services. Braverman Law Group is here to help clients with benefits planning, estate planning, and many things in between. To schedule a free, no-obligation consultation with one of our trusted Boulder estate planning attorneys, give us a call today at (303) 800-1588.

Understanding the Terms

As a quick review of some essential terms, the person who creates a trust is called a trustor, grantor, or settlor. A family trust is created when the trustor and the beneficiaries of a trust are members of the same family. A trust agreement is the legal document that sets up a family trust, and the agreement typically designates an initial trustee or two or more initial co-trustees. The trust agreement also designates one or more successor trustees in the event that the initial trustees are no longer able to serve (i.e. in cases of death, removal, or resignation). The trust agreement should include the circumstances under which a trustee may be removed by the trustor.

Understanding How Removal Works in a Revocable Trust

It is important to note that the removal of a trustee is governed both by the trust agreement and by state law. When looking at a trust agreement, in a revocable trust, the trustor may amend the trust agreement in order to remove a trustee. Trust agreements typically allow the trustor to have the ability to remove a trustee, and this may be done at any time and also may be done without the trustee giving a reason. However, in an irrevocable trust, the trustor cannot remove a trustee.

As mentioned, state law also plays a role in removal by providing guidelines about a trustee’s fiduciary duty, or their obligation to follow the terms of the trust agreement, to act in good faith, and to act in the best interests of the beneficiaries. A trustee may be removed legally by co-trustees or beneficiaries if the trustee violates the requirements of the trust agreement, mismanages trust assets, participates in fraud, is proven to have the inability to cooperate with other trustees, conflict of interest, mental incapacity, or financial insolvency of the trustee (i.e. filing for bankruptcy). In addition, there are guidelines for removal by a trustee and removal by beneficiaries, in addition to filing a court petition for removal. These matters can be complicated and stressful, but connecting with an experienced trust and estates attorney could make a ll the difference.

Speak with a Boulder, Colorado Trusts and Estates Attorney for Help Answering Your Questions

Attorney Diedre Braverman is licensed to help our clients with trusts and estate matters. She’s also a CERTIFIED FINANCIAL PLANNER™ qualified to coach clients. For all other estate planning needs, the Braverman Law Group has years of experience crafting plans for our clients. To schedule a free, no-obligation consultation with one of our trusted attorneys, give us a call today at (303) 800-1588.

A Professional Trustee Does Not Understand Me or My Family’s Dynamics

Many individuals worry that if they hire a professional trustee, they are choosing someone who does not know them and their family—as compared to picking a loved one to serve as trustee. However, professional trustees not only strive to get to know their clients but also come with the experience to navigate the complicated nature of estate planning. A major part of a trustee’s job is to fulfill the creator’s written wishes. To do so, they build strong relationships with families by learning more about them and treat beneficiaries as partners during the administrative process.

Most lawyers will also recommend including the power to remove and appoint a new trustee within the estate plan. So, if an individual is unhappy with their trustee, they have the opportunity to change this without legal woes. Additionally, a person can name co-trustees like a professional trustee and a loved one, so the estate plan creator gets the expertise of the estate plan along with someone who deeply knows the individual.

Professional Trustees Are Too Expensive

Many people worry that they cannot afford a professional trustee. However, if a family member serving as trustee makes critical errors—because they are inexperienced—it can be even more costly. A trustee’s duties include record-keeping, managing beneficiaries, and investing the assets in the estate plan. While professional trustees have experience in these matters, most others do not. If the trustee does not properly perform his duties, the beneficiary can sue them. This can often be very expensive and cause a non-professional more stress than they were anticipating.

Deciding if a professional trustee is the right person to manage a person’s estate is a critical—and often overwhelming—choice. Because of this, individuals working through the estate planning process should contact a knowledgeable attorney as soon as possible, as they can advise them about their options.

Contact a Colorado Estate Planning Attorney

If you or a loved one needs help deciding whether or not to hire a professional trustee, contact the experienced Colorado estate planning attorneys at the Braverman Law Group. Our attorneys not only have experience advising clients about their existing estate plans, but they also can assist individuals in the beginning stages with crafting their estate plans. We understand that estate planning can often be overwhelming, so we are here to help. To schedule a free consultation and to speak with one of our attorneys today, give us a call at 303-800-1588.

Initially, the person creating the revocable trust normally acts as the trustee. However, in an irrevocable trust, someone else must be appointed to this position. The successor trustee’s role only comes into play when the initial trustee can no longer manage the trust. When the initial trustee either passes away or becomes incapacitated, the successor assumes control of the trust.

While a successor trustee’s role may seem similar across all successor trustees, this is not the case. The exact duties the successor trustee must undertake depends on the terms set in the trust agreement. The successor trustee often appraises the value of all the assets in the trust, pays all taxes, and sets aside funds for expenses the trust may incur. Regardless of the specifics of the trust, the main duty of all successor trustees is to handle the transfer of assets to the beneficiaries and ensure that they follow the terms written in the trust. Unlike an estate executor, a successor trustee’s role may continue for years after the initial trustee’s passing. For example, the initial trustee may leave a grandson assets that they do not want him to receive until his 25th birthday. If the initial trustee passes when the grandson is 14 years old, the successor trustee must safeguard his inheritance until his 25th birthday.

Because a successor trustee’s role is immensely important, the initial trustee should think carefully about who they name to serve in this position. As the position may last for years, the initial trustee should ensure the person they choose is up to the task—along with having experience in managing a trust and its assets. Further, naming a successor trustee is a critical decision, and Coloradans should contact an experienced estate planning attorney who can walk them through how to pick the right successor trustee for them.

Contact a Colorado Estate Planning Attorney

If you or a loved one is interested in creating a revocable living trust—or need help picking a successor trustee—called the Colorado estate planning attorneys at the Braverman Law Group. With years of experience creating a variety of estate planning documents, from revocable living trusts to wills, we will make the right estate plan for you and your family. Contact us today at 303-800-1588 to schedule a free consultation with one of our attorneys. You can also reach out to us through our online form, and one of our attorneys will get back to you as soon as possible.

What is a Trust and Who is Involved in the Process?

A trust is a legal agreement involving at least three parties, where one party holds and distributes assets on behalf of another. The terms of the trust – which all parties must abide by – are included in a legal document called the trust agreement.

As mentioned previously, there are three parties involved in a trust agreement. The first party is called a trustor, who creates the trust and is giving away, or transferring, the assets. The second party is called the trustee, who manages the trust and its assets. The trustee is legally obligated to manage the trust in the best interest of those receiving the assets and also consistent with the terms of the trust agreement. The third party is called the beneficiary, who will receive the assets in the trust. They are called the beneficiary because they benefit from the trust. It is important to note that the same person can be in more than one of these roles, even at the same time. For example, often, the same individual will be the trustor and the trustee.

Are There Different Types of Beneficiaries?

Colorado law provides trustors with a lot of flexibility in drafting their trust and adding the necessary provisions to ensure the trust assets are managed and distributed as they intend. Because of this, a trust need not have a sole beneficiary; rather, there can be multiple beneficiaries at a time. Many people wonder what to do if a trust’s beneficiaries die before the assets run out; however, individuals drafting a trust can plan for this possibility. A trustor can create primary or current beneficiaries to receive benefits now, and also add into the trust contingent or successor beneficiaries, if the current beneficiaries pass away. Additionally, the trustor has the ability to change the current beneficiary – or beneficiaries – at any time.

Besides a traditional beneficiary, other types of beneficiaries can be named within a trust, such as income and remainder beneficiaries. An income beneficiary only receives income earned by the trust, like interest and dividends. On the other hand, a remainder beneficiary is designated to receive any assets left in the trust after a previous beneficiary passes away.

Because drafting a trust can often be complicated – and must comply with Colorado and federal law – individuals interested in creating a trust should contact an experienced estate planning attorney.

Are You Interested in Contacting a Colorado Estate Planning Attorney?

If you or a loved one is interested in creating a trust or Colorado estate plan, contact the dedicated attorneys at Braverman Law Group. We have extensive experience handling various estate planning and elder law matters for a diverse set of clients. Our attorneys take the time to explain the estate planning process, as they understand how critical it is to create the correct estate plan for you and your loved ones. To learn more, and to schedule a free consultation, call us at 303-800-1588 today.

Managing an estate can often be very technical and time-consuming. Because of this, there are factors to take into account when selecting a trustee:

Cost

It may seem logical that having a family member serve as a trustee would be cheaper than hiring a professional; however, this is not often the case. Individual trustees, unlike fiduciary institutions, must hire other professionals like attorneys and CPAs to help them perform estate-related duties. These costs are often unexpected and not included when calculating the overall cost of a trustee. On the other hand, corporate trustees often provide these services in house and are bundled into a comprehensive fee. Additionally, inexperienced trustees will often forget that the residence of a trustee determines the income taxation of a trust and its relevant state law. On the other hand, professional trustees may also have an office in a state that will avoid state income tax on the estate.

Oversight of Assets

Because funds can be mismanaged, whether accidentally or purposefully, it is important to consider whether the trustee and his conduct will be subject to examination. Trusts handled by individuals have very little oversight, meaning misconduct is less likely to be caught. However, professional trustees are often audited by internal bank auditors and government regulators to ensure compliance with relevant law. This safeguard is critical to make sure assets and property is distributed according to the person’s wishes.

Ability to Make Tough Decisions

Trustees are often required to make hard choices, such as withholding assets from a troubled beneficiary. When the trustee is either a family member or close friend, they may be unable to make impartial decisions and say “no” when necessary. On the other hand, a professional fiduciary is impartial and will manage the trust according to its terms and applicable law. Professional trustees are experienced in making difficult decisions and will do what is in the best interest of the estate, not the personal wishes of others.

Managing an estate plan can often be very technical and time-consuming, so it is critical to select the proper trustee. An experienced estate attorney may be able to help with this process and ensure assets are properly handled.

Contact a Boulder Estate Planning Attorney for Immediate Assistance

If you do not yet have a Colorado estate plan, or are in the process of putting one together, contact the dedicated attorneys at the Braverman Law Group. We have extensive experience assisting clients of all backgrounds and of varying net worth create comprehensive estate plans. The trust administration process is crucial, and we can help you make the important decisions that ensure your estate plan is effective. To learn more, and to schedule a free consultation to speak with an attorney today, call 303-800-1588