In 2014, Wells Fargo published the findings of a study that focused on how American families communicate about personal finance. They discovered that money is harder for families to talk about than death! Forty-four percent of respondents ranked money as the most difficult topic to discuss with family; followed by death (38%), taxes (21%), and personal health (20%). So today, I thought I’d tip-toe into a subject that combines all 4 topics into one super-fun conversation…Choosing a trustee for the family trust.
There’s no doubt that choosing a trustee can sometimes be delicate. Why, you ask? Because the trustee has complete control of the trust. They control how much and when money is distributed to beneficiaries. They also control the investments within the trust, the accounting, and the administration. Choosing the right trustee is mission critical.
As the grantor of a trust, you have only two options for selecting a trustee. You can choose a trusted individual, or you can choose a trust company. Naming a friend or a family member may seem like a simple solution, but very often it’s not the best solution.
There are several reasons why. If the person named as trustee is either incompetent or dishonest, the plan will quickly go wrong. Or, if the named trustee is uninterested or preoccupied with their own life, sloppy decisions can lead to costly results. The stories that we hear about incompetent or dishonest trustees are truly frightening.
On the other hand, you could hire a corporate trustee to do the job. A trustee’s job is to follow and execute the rules of the trust document. Corporate trustees tend to offer more structure to the overall execution of the trust document. They understand taxes, legal issues, etc.… And, when it comes to making distributions to beneficiaries, they tend to follow the direction of the trust document, rather than playing favorites.
A corporate trustee is not right for everyone. Many people simply prefer to appoint someone that they know and trust rather than paying a professional. Many of our clients have chosen a trusted individual to serve as the primary trustee but named a corporate trustee as a contingent. In any case, choosing a corporate trustee can be a daunting task. If you’re considering it, we’re happy to help you find a corporate trustee that is a good fit for your specific situation.
Feel free to call or email me if you’d like to learn more about appointing the trustee that is best for you and your family.