How do you make sure you leave the trust in the right hands?
Picking a trustee can be a very difficult task. It is not the same as crafting words to paper – ink is cheap in a certain sense – because picking a trustee means picking the right person. You have to read people well and know the right people (or financial institutions) to pick. Financial Planning recently offered a few principals well worth mulling over if you’re in the process of creating a trust in an article titled “Selecting a Trustee? 3 Factors to Consider.”
Factors one and two are useful foils: “think twice before naming children” and “consider using a professional.”
There are definite trade-offs to read into this because a family member turned trustee is certainly wedded to the project and the well-being of the family. On the other hand, a professional is detached. Of course, a professional is detached for good reason. Depending upon the complexity of the assets in a trust, correctly managing them can require a special skillset. Finally, and regardless who you put in charge, remember that the trust itself can always be built to include a power to remove a trustee. Depending upon whom you choose and who your beneficiaries are, this may be more and more important to strengthen, either to protect the trustee or to ensure that the trustee can be kicked out.
Finding a trustee is always a bit of a balancing act, but it is a necessary one. The purpose of the trust itself is to ensure there is a legal device carrying out your wishes, to hold your assets and protect your beneficiaries as you would do so yourself.
Reference: Financial Planning (May 29, 2014) “Selecting a Trustee? 3 Factors to Consider”