As both your estate and your family grow, the need for a more comprehensive estate plan will likely be clear. When you decide to improve your existing estate plan, additional estate planning tools and strategies may need to be considered and ultimately added to your existing plan. At Clarity Legal Group, our attorneys consider the Revocable Living Trust to be one of the most important foundations of a good comprehensive estate plan.
If you decide to incorporate such a trust into your estate plan, you will likely serve as your own initial Trustee. Of course, one of the main reasons for having this trust is so you and your family will have a well considered tool for managing your affairs when you can no longer manage them yourself, because of declining capacity or death. To have a good plan, you need to choose one or more successor Trustees to oversee the administration of your trust in such a circumstance.
At Clarity Legal Group, part of the estate planning process we guide you through is the thoughtful choice of the best available people (or institutions) to serve as Successor Trustees. Don’t worry if you do not understand what it takes to be a successful Trustee. We will guide you through the criteria for making a good choice and then will educate you and your chosen successor Trustee regarding the responsibilities, powers and duties associated with servicing as Trustee.
I think supporting your Trustee in effectively performing his or her responsibilities is so central to getting your planning right that one of the first things I implemented after we formed Clarity Legal Group was our annual Fiduciary School. At this annual event, we educate our clients and the people they have chosen to serve as Power of Attorney, Health Care Power of Attorney, Executor and Trustee in the scope of their responsibilities and how the legal documents serve as tools for them to do theirs jobs. The best available choice as your Successor Trustee may not be a perfect, but when the time comes, you will be fine with a reliable person, administering a well drafted Trust Agreement supported by a strong team of professionals who have organized themselves to provide effective support.
A Living Trust for Efficient Management
A Living Trust is not something we recommend only for people of great wealth or with complex situations. It is a foundational tool for the efficient management of your affairs during you life, during your possible incapacity, at your death, and may contain sub-trusts arising upon your death as a tool for those you leave behind. If the ownership of your assets is properly adjusted in conjunction with the creation of your trust, it will reduce challenges associated with sharing control of your assets as your capacity declines. This Living Trust will save time and money by reducing the exposure of your assets to probate at death, will facilitate the sale of any real property you might have after your death, and will often reduce costs and legal fees in the administration of your estate.
Duties and Responsibilities of a Trustee
In overall terms, the Trustee is responsible for managing the trust assets as well as administering the trust using the rules you set out in your Trust Agreement. Among the specific duties and responsibilities of a Trustee are the following:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the specified standard for investment
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Keeping detailed trust records
- Preparing and paying trust tax obligations after your death
Factors to Consider When Choosing a Trustee
When you are considering an individual as a possible Trustee, take the time to consider how the following factors apply to your candidate:
- Respect – can the individual respect your wishes? Will he/she work diligently to fulfill your stated trust purpose, even if he/she doesn’t agree with the purpose? If the answer to either question is “no” then you should reconsider your choice.
- Experience – in serving as a Trustee or managing money is overrated. You want to choose a Trustee who has experience in exercising responsibility generally, and a habit of getting things done on a timely basis. A Trustee can always seek assistance with specialized tasks such a preparing a tax return, making investment decisions or understanding the applicable laws.
- Conflict-free – at the same time, your Trustee should not have any conflicts with the trust beneficiaries. If the Trustee already has a significant personal relationship with a beneficiary, this can often lead to a conflict of interest that can harm the trust because your Trustee should remain neutral.
- Detail oriented – a Trustee is responsible for keeping records of all trust business so appointing someone who has experienced with keeping similar records is always a plus.
- Conflict resolution – if your trust includes more than one beneficiary, a conflict among the beneficiaries may arise at some point. Having a Trustee who can resolve that conflict without the need for litigation is an excellent benefit to the trust.
- Willingness – it is surprising how many people appoint Trustees without first discussing the appointment with the Trustee. Always ask your future (hopefully) Trustee if he/she is willing and able to serve in that function before making the appointment official.
Contact Chapel Hill Trust Lawyers
If you have questions or concerns relating to picking the right Trustee for your trust, please contact the Chapel Hill trust lawyers at Clarity Legal Group by calling us at 919-484-0012 or contact us online.
by Mark Costley
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