A trust holds a legal title for property with a benefit for another person. The individual who establishes a trust is called the grantor, who then appoints a manager, known as a trustee, to oversee their assets and protect them. Essentially, this arrangement means that one person is holding assets for the benefit of someone else throughout their lifetime, and thereafter distributes assets based on the grantor’s wishes. The grantor can become the trustee and then appoint a successor trustee, but then what does a trustee even do?
A trustee has a fiduciary duty to protect the assets in an estate, distribute the trust as instructed, administer trust terms, remain loyal to beneficiaries and communicate with them, keep track records of all financial transactions for the estate, control trust property, keep beneficiaries informed, collect trust property, enforce and defense creditor claims, and so much more. As your lawyer may suggest, like an estate planning attorney from Silverman Law Office, PLLC, who you choose to have this role as trustee is going to be important, as they are essentially the person who will be taking care of your legacy, so it’s not a decision to take lightly. You may find yourself trying to pick between one of these parties as your grantor: a family member, friend, trust company, or corporate trustee.
Your friends and family.
When appointing a trustee for your trust, as the grantor, you may want to choose a spouse, best friend, sibling, or adult child. Of course, someone like this is going to have a better understanding of family dynamics and other nuances between relatives. You probably trust them more than those who are emotionally indifferent to your estate, because they know you through and through. However, there is the risk of resentment from family members towards this person, especially if the appointed trustee is struggling with this responsibility. It’s better to choose someone with a kind heart who will always act in the best interest of your legacy, but they should at least be willing to get help from a legal professional if they have questions or concerns.
Trust companies or corporate trustees.
You may want to consider a corporate trustee or trust company as your trustee for the estate. These parties provide fiduciary services on a professional level, and can act independently. This means that they’ll be charging you for the service, but it can be worth the cost, particularly if you anticipate there being disputes among beneficiaries. Trust companies or corporate trustees are going to be able to make more firm decisions and be straightforward with beneficiaries compared to a family member or friend. There are systems and procedures in place so that these parties can manage a trust in a consistent and fair way. A professional trustee is someone who can be useful if you have high valued assets and a trust that is intended to remain in effect for a long time.