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Selecting a Trustee

Entrusting a family member or friend with assets intended for the benefit of a loved one can be a difficult decision. Being a trustee involves: understanding and making investment, keeping an inventory of the trust property, making, keeping and sharing accounting records, collecting and reporting income, payment of bills and debts owed by the trust, and filing tax returns, and maintaining thorough records. Usually, the good businessman in the family or the nurturer with the time available for the job have little experience to prepare them for the unique challenge of managing money with others’ needs at stake. Often they are unaware of the legal framework under which a fiduciary must work. Sometimes, they have opinions and family issues that become a focal point of their trusteeship and guide their actions making it difficult to obtain a fair outcome. Most loved ones will try their best to set their own feelings aside and learn as much as they can to fulfill their obligations to the estate. Having advice when it is needed can make a big difference in helping a family member be a successful trustee.

Should no family members prove to be available or a good choice, or their time be insufficient, a corporate trustee should be considered. A corporate trustee is a company that is in the business of exercising trust powers. The company assigns a trust officer to your family’s trust. Like any trustee, this trust officer must become familiar with the wording of the trust document, and understand the intent of the trust maker. Employing a corporate trustee enables an independent third party to make all decisions regarding the preservation and distribution of assets in the trust.

In order to select the right trustee, you must get solid answers to a number of questions. Does this trustee possess the ability to make decisions based only on the best interests of the beneficiary? Will this trustee treat all beneficiaries equitably, taking into consideration their individual needs and financial positions? Does this trustee have sufficient training, experience and judgment to handle your trust properly? In the event that the trustee will be unable to serve as trustee for the life of the trust, you will also want to know who will step in to take that trustee’s place. Can your trustee equip its trust officers with the proper resources to manage money, monitor investments, and balance risks? Will your trustee be responsive to your concerns and those of your family in the event that circumstances change or difficulties should arise? Answering all of these questions successfully will greatly enhance your selection of a trustee, individual or corporate.

Your trustee should be able to make objective, equitable decisions based on experience and an intense sense of responsibility. To get and keep the attention of a good trustee, individual or corporate, it may be advisable (or required) to pay a fee. One reason a family member is often chosen is economy; this is something we do for each other and it should be free of charge. The corporate trustee charges a fee. The probate-trust code provides a maximum 5% fee for the trustee, although most are on a sliding scale for assets managed. This fee is for work performed and is not to be confused with a trust interest.

Please ask us about your choice of trustee and will will give you our best advice.

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