Boulder Estate Planning Legal Blog
When it comes to estate planning, selecting a proper and capable trustee is one of the most important steps in the process. A trustee takes legal ownership of trust assets, manages the trust, and is responsible for carrying out the purpose of the trust.
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.
