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Choosing an Estate Trustee

Choosing an Estate Trustee

In this podcast episode, we delve into the complexities of estate planning and provide valuable insights to help you make informed decisions when it comes to choosing a trustee. Whether you’re considering a friend, family member, or professional as your trustee, learn how to navigate the process and ensure the smooth administration of your assets.

When deciding upon a trustee to oversee the management of your financial and logistical life plans, it is important to think about the following four W’s:

Who: Choosing a trustee – This is almost like choosing a life partner. The person you choose to be trustee of your estate is someone you intend to have a long-term relationship with. As such, consider the following:

  • Does this person want the job and everything that comes along with it? It’s a long-term commitment so be sure they are willing and available to fulfill trustee responsibilities.
  • Is this person qualified? Be sure to assess the potential trustee’s financial know-how and ability to handle complex duties such as investing trust funds and managing various assets.

What: Co-Trusteeship- Sometimes two heads are better than one. If one of your trustees lacks experience, you might consider adding a co-trustee to combine expertise and relationship dynamics. Some advantages of co-trustees include:

  • Achieving checks and balances for proper administration and accountability.
  • The role of an impartial trustee or trust protector in overseeing trustee actions.

Why: Professional Trustees – Choosing a professional trustee can aid in ensuring continuity and harmony. Why consider a professional?:

  • The long-term nature of estate planning lends itself to professional management since a company can outlive any humans assigned to the task. 
  • Conflicts of interest are commonplace among surviving spouses and ultimate beneficiaries. This can be alleviated by a professional, unbiased third party handling distributions.

How: Selecting the Right Professional Trustee – There are many factors to consider when evaluating professional trustees such as:

  • There are different options for different sized trusts. Look at banks for large trusts and trust companies for mid-sized estates.
  • Cost will inevitably be a concern. Be sure to appraise administrative and investment fees and keep in mind that this expense will be incurred posthumously. 
  • Customer service should also be examined. Choose a firm with a solid reputation, experience, accessibility, responsiveness and ability to collaborate with beneficiaries.

Don’t miss this informative episode, offering actionable advice on selecting the ideal trustee for your estate. Subscribe now to our podcast and embark on your journey to successful estate planning.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Transcript

Transcript
Mike:00:00

Welcome to Financial life planning, I’m your host, Mike Morton, and running solo today. Today’s episode, and what I want to talk to you about is how to choose a trustee for your trust. Alright, so I just want to go through some important aspects to be thinking about if you have a trust and when you’re setting up a trust, you’re going to need a trustee for that, and how to go about thinking about choosing the right person or people for you and your family. So very briefly, of course, a trust is a legal entity that can own assets. So usually, what you’re going to do is set up the trust, which is going to own some stuff, like your home or a brokerage account and then if anything were to happen to you, there’s beneficiaries of the trust, and also there’s other trustees, you might be the trustee. But there could be other trustees that could take over in case you’re incapacitated, or in case of your death, that things flow legally. So it’s a trust that’s a legal document, and then that trust can own assets. And then there’s a trustee that helps manage the ownership of that as those assets, whether it’s your house, brokerage account, or maybe your other accounts flow to the trust in case of your death. But there’s trustees now, a lot of times you might be the trustee of your own trust and that’s great. That means your bank or brokerage account is owned by the trust, you’re the trustee. So you can just use it as every day checking account, or you can make investment decisions decide what to invest in, you’re the trustee of your trust, you get to make decisions. So everyday banking, and decisions are just the same, you sign the check as trustee, a lot of times just leave that off. So every day is the same. But you might want to have other trustees on the trust as well, either a co trustee or definitely successor trustees, if you’re going to be the trustee of your account, so that if again, if anything happens to you, other people can start making those decisions for the trust. So these conversations, how do you think about a co-trustee or a successor trustee, or if it’s a revocable trust having another trustee that can make those decisions? Trusts are obviously used with estate planning and also, as I mentioned, if it goes beyond your life, something happens to you, of course, it’s going to flow to a successor trustee or another person. So how do you think about choosing that person? First, let’s think about what are the decisions they’re gonna be making, it’s going to be financially related decisions. So you’re going to want to have somebody that’s got some expertise, or some experience making financial decisions, because there’s going to be financial duties for this person. Now, there might be family dynamics, so you want to think about family decisions. Is this going to be a friend or family member? How’s that going to work out with you and this trust? Or is it going to be a professional trustee? And how are they going to interact with you or with the rest of your family? This person needs to make investment decisions. So having some experience around making investment decisions, and of course, they’ve got to be willing to serve. So make sure as you’re thinking about potential people, that this person is going to be willing to take on this role for you to serve as a trustee now you can have co-trustees when it comes to a trust. So these are people that would work together to make decisions, they can either do it independently, so the trust could be that each persons co-trustees could make independent decisions, or they have to make decisions together. But the nice thing about co-trustees is it provides nice checks and balances especially when there’s different experiences or skill sets we just talked about this person needs to have investment experience financial experience, interactions with family communication experience and how to run a trust, how to be the trustee. What are the responsibilities, having co trustees could really can have a couple of people that bring good skill sets together, consider a professional trustee as a co-trustee. So if you did want to use a family or friend, maybe they don’t have all those skill sets, you could have a co-trustee that’s a professional trustee like a bank or trust company that could really help out and bring some of those skills. Of course co-trustees need to be able to work well together. So consider that, and again another nice thing is that it could be impartial, right. So if you did have a family member or friend is one trustee, you might want a co-trustee that’s an impartial trustee. So a few things to think about, nice benefits of having co-trustees. Now when it comes to hiring a professional trustee some things to think about, these could be a bank, or those would be larger trust, you can use banks or a trust company could be for larger smaller trusts. So there’s a couple of options there’s banks or trust companies are set up to have professionals that do this. So when you go to the website, or you call them up, that’s what they’re set up to do professional trustees that run and help manage truss. Now, the first thing to consider is the cost. Okay, so these guys are professionals so there’s going to be some cost associated with that. So you want to make sure you really understand what are the costs, because this is going to be a long term relationship, hopefully. And so you want to make sure you really are trying to choose the right person, make sure that the professional trustees are accessible, and they’re responsive. All right, that’s really important. You want things done a lot of the time, it’s going to be run in the background, it’s not going to bother you day to day, but when you do need something, you want them to be there and ready. Consider your reputation experience and to work well with the beneficiaries, things like that make sure you’re thinking in that long term, time horizon. And that’s my other piece of advice around looking at professional trustees. Think about the long duration of this trust. Trusts are usually set up to span quite a number of years, but even beyond yourself, and so beyond your lifetime. So think of that long duration, think many years down the road, when you’re thinking about professional trustee or family member trustee. All right, the continuity. That’s what’s nice about the professional trustees thinking about, yeah, they’re going to have continuity, it’s for a company. So you, of course, individuals might come and go, but you’re hiring that company to help manage the trust to be that trustee considering conflicts of interest. That’s what’s nice about the professionals, they really have that covered, they make sure as your trustee of the way it’s set up and won’t have conflicts of interest. And another nice thing about professional trustees is they’re impartial. For the family dynamics, of course, when we’ve got trust, and the you’re putting some assets into the trust, and you’ve got the beneficiaries, and it’s got this long duration, there could be a lot of family dynamics going on. And so professional is really great for navigating being impartial and navigating those family dynamics, especially down the road. Now what about a friend or family member, instead of that professional, or maybe as a co-trustee? A lot of people when I talk to my clients, they’re always thinking, who do I hire as a trustee, and immediately think of some friends, close friends or a close family member. Some things to consider there, as you’re thinking about those names. Obviously, right at the top, make sure they’re trustworthy, make sure whoever is going to have this large responsibility that you really trust, they have a long term relationship, you really know their character, and they’re going to be a trustworthy person. Again, financially competent. So we talked about that they’re going to be making decisions about not only the investments, but also the distributions, when is it appropriate to be giving out some distributions from the trust, the trust document will have some of the language in there but the trustee has to interpret that and go through those things. So make sure you’re financially competent, the willingness to serve, make sure you approach a person and really make them understand like, hey, this is gonna be long term relationship, are you willing to do this, of course, the relationship dynamic, okay, because when we’re talking about trustworthy, and then the money in the trust, make sure that’s not going to mess up any dynamics that you have with this person or down the road, family and relationship dynamics, communication and collaboration, make sure this person is going to be good at communicating and understands the roles and responsibility. And when it comes to a friend or family member, make sure you have a backup plan. You know what happens if something happens to this person, make sure you got a couple of people or maybe co trustees, or a professional as a backup if or when something happens to this other trustee. So that kind of runs through a lot and gives you a lot to think about professional trustees, co trustees, who it’s going to be, dynamics, the responsibility, some of the experience that you’re looking for. And it’s really crucial that you get the right person in there, because it is that long term relationship. So make sure you really thinking about all of those factors as you go through who’s going to serve as a trustee for this really important part of your estate planning at setting up your beneficiaries, handling your assets for something were to happen to you, making sure that things go smoothly in the future. And the trust is there to execute your wishes. You know how you want your assets to flow to the beneficiaries. So having a trustee that really understands that, and that’s going to make those things happen the way that you want it to. Thanks for joining us on financial planning for entrepreneurs. If you liked what you heard, please subscribe to and rate the podcast on Apple, iTunes, Google Play Spotify, or wherever you get your podcasts. You can connect with me at LinkedIn for Morton financial advice.com. I’d love to get your feedback. If you have a comment or question, please email me at financial planning . Until next time, thanks for tuning in. This recording is for informational purposes only and should not be considered for investment advice or opinions expressed as our of the date of recording. Such opinions are subject to change. We do not guarantee the accuracy or completeness of the data presented here.

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