Boulder Estate Planning Legal Blog
Choosing a trustee can be just as important as establishing a trust itself. Often, an individual will designate their child to help administer their plan for the trust. Clients may believe that appointing their child as a trustee will save them the expense of hiring a professional fiduciary. However, in some circumstances, the expense may be worthwhile. Before appointing your child as a trustee, you should consider the potential drawbacks of putting your child in charge of your life.
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.
