01 Mar
Establishing a trust can be a valuable estate planning move in a variety of different circumstances. People worried about estate taxes, eligibility for Medicaid, creditor claims and beneficiary misconduct may opt to fund a trust when putting together an estate plan. The goal is typically to preserve resources, limit conflict and enhance control over the use of inherited property.
There are numerous different types of trusts that can help people in a variety of different circumstances. Choosing to establish a trust and selecting the type of trust are both important choices during the estate planning process. The grantor or trustor creating the trust also needs to select an appropriate candidate to act as their trust administrator or trustee.
Depending on the circumstances, the trustor may sometimes act as the initial trustee. In such cases, they need to select someone to act as a successor trustee when they become incapacitated or die. In other cases, an outside party may immediately assume authority as a trustee. Selecting the right candidate is of the utmost importance. What characteristics may lead an individual to properly fulfill trustee duties?
Geographic proximity
In many cases, the party serving as trustee may have to physically secure assets and interact with beneficiaries. Choosing someone across the country may not be the best option. Someone who lives nearby or who can make a commitment to relocating during trust administration can directly fulfill their duties as trustee.
Adequate physical and mental health
A trustee must be physically capable of securing and managing assets. They must also be mentally healthy enough to withstand the stress that comes with trust administration.
Age can also be an important factor to consider. The party establishing the trust wants to name someone who can realistically fulfill their responsibilities for years or even decades in the future.
A deep sense of responsibility and ethics
A trustee technically has a fiduciary duty to the beneficiaries of a trust. They are theoretically in a position where they can abuse their role for personal gain.
It is of the utmost importance to select trustee candidates who have a history of doing the right thing even when it is not necessarily convenient. Someone who is organized and responsible enough to manage the intricacies of asset management and distribution could potentially serve as a trustee.
Their willingness to take on that authority is another important consideration. The trustor may find that top candidates actually do not want the stress and ongoing personal responsibility that come with trust administration. Establishing a shortlist of multiple reasonable candidates who could serve as trustee is an important aspect of establishing a trust.
Those intending to add trusts to their estate plans may need help selecting the right type of trust, planning how to fund it and appointing the appropriate candidate as their trustee. Securing support during trust creation can help people protect themselves and their loved ones.