Posted by Fletcher Accounting and Tax Service Inc.

How To Choose A Trustee

How To Choose A Trustee

It is not surprising that choosing a trustee is one of the most critical aspects of setting up a trust. Trustees are often unprepared, overburdened, disinterested, or inadequate for the task they have been given.

A trust is a contractual agreement under which a trustee holds legal title to another person, called "beneficiary." The trust document will call the custodian, although there are different types of trusts. The simplest is a living and revocable trust in which the person who creates trust keeps control of the trust while alive. In this situation, the fiduciary document will designate a successor trustee who will take control when the original trustee dies or becomes incapable. Other trusts, such as an irrevocable trust or a special needs trust, may have a separate trustee from the outset.

The function of the trustee and the best choice of the trustee varies depending on the type of trust you have defined. If you have active confidence in the prevention of succession and distribution of assets to beneficiaries after your death, the tasks and schedule are very different from those of a fund designed to manage assets and pay distributions years after your death.

Even then, every good trustee must have some standard features

• Personal Characteristics: is your trustee above reproach? Anyone who will manage your finances must be honest with high standards of conduct. They have the fiduciary responsibility to act in the best interests of trust and beneficiaries.

In general, well-organized and detail-oriented people have fewer difficulties for the trustee. It is also useful if they know how to interact with recipients, and if their financial situation and trust are stable.

• Objectivity: Is your trustee honest? The trustee may have conflicting interests in the beneficiaries and must act as an impartial judge to settle disputes. A uniform temperament is an advantage.

• Capabilities: Is your trustee usually sensitive and not overloaded with business, legal, and tax issues? Your trustee does not need to understand all the complexities of your trust agreement, but it is best to have at least a full understanding of the issues and potential costs.

First of all, the trustee needs to know when to seek the help of a professional. They may be required to maintain accounts, manage investment activities, tax and distribute distributions, among other activities. Having experience is wonderful, but common sense is a necessity.

• Time: does your trustee have time to monitor your trust? The most qualified person from a technical point of view may not be the best choice if they are so busy with their business that they cannot pay attention to yours.

• Goals And Objectives: Do you trust your trustee to understand the goals and objectives of your specific trust? Equally important, do you think that your trustee will achieve these goals, even if you disagree with them?

• Longevity: is the trustee young enough and in good health? Obviously, your trustee should live than you should. A big brother can be well qualified, but it's the wrong choice. In any case, it is advisable to have a successor administrator or a co-administrator.

Do not limit yourself to a trustee; Co-managers are common, and for virtually all active funds, the farmer and his spouse are co-managers.

There are three typical trustee options:

• Family Members: Family members can inquire about their wishes but have other qualifications. Pay special attention to family dynamics when appointing a trustee. The call of brothers as co-trustee can divide a family.

• Professional Trustee: Choosing a lawyer, a bank, or a reputable company should eliminate skill issues. On the negative side, rates are essential: family members can better serve states with less than $300,000 to $500,000 and no unexpected problems.

Business consultants give neutral advice, thus eliminating family prejudices, but a professional trustee may not be as aware of their wishes.

• Co-Trustee: By designating a family member and a professional co-trustee, you can achieve the best results in both worlds: one focuses on family issues, and one focuses on trust management mechanisms. You can name two family members as board members, but again, pay attention to family dynamics.


Finally, the appointment of a manager or trustee is a corporate decision and must be treated as such. Do not name any family members who do not join the company as a trustee and, if necessary, consider joining the co-trustee.

Fletcher Accounting and Tax Service Inc.
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