Ensuring how a person’s assets and property will be handled after death is a critical first step when drafting a Houston estate plan. Often, a comprehensive estate plan involves the creation of one or more trusts. Thus, the second step of estate planning, determining who to name as a trustee, is often just as vital.
Serving as a trustee is time-consuming and complex. Although individuals often select a family member or close friend to serve as the trustee, picking a professional trustee can often eliminate a lot of the common issues that trustees face when executing an estate plan. Because a trustee will be responsible for ensuring an individual’s assets are distributed in a fair and legal manner, there are factors to consider when choosing a person to serve as the trustee of the estate:
Ability to Make Difficult Decisions
While estate plans often thoroughly determine how assets are to be distributed, trustees are often tasked with making personal difficult decisions. When a trustee is a family member or close friend, it can be difficult to make objective decisions, such as withholding property from a spend-heavy beneficiary or assisting a beneficiary with substance abuse problems to find a rehabilitation facility. A corporate trustee is better suited to make impartial decisions and will administer the trust to comply with the documented wishes of the individual.
Acceptance of Liability
Because the handling of an estate plan can often be contentious, a trustee may be personally liable for any unintentional conduct that falls below necessary legal standards. Such misconduct may include improper accounting or mishandling of assets. When beneficiaries discover mistakes like this, they may pursue legal action against the trustee. On the other hand, a professional fiduciary is trained to avoid such mistakes. Additionally, corporate trustees often carry insurance as additional protection, something family members appointed as trustees do not have.
Record Keeping and Safeguarding Assets
Administering an estate plan can be very complex; filing tax returns, keeping records of trust account activity, and reporting trust income and deductions are all part of the job. For individuals who are serving as a trustee for the first time, this can often be overwhelming and very time-consuming.
Additionally, there is a lot more oversight when corporate trustees are handling an estate plan, as professional fiduciaries are supervised by internal bank auditors and government regulatory agencies. On the other hand, estate plans supervised by individuals are rarely examined by outsiders, which makes potential mismanagement, even accidental, unlikely to be found or corrected.
While choosing a trustee at first may seem like a simple decision, making the correct choice can be as challenging as it is important. Because of this, consulting an experienced estate planning attorney who can help select the best trustee can save an individual, and their family a lot of frustration and worry.
Contact a Houston Estate Planning Attorney
If you or a loved one needs help drafting a Houston estate plan, or choosing the right trustee to manage the estate, contact the dedicated attorneys at McCulloch & Miller, PLLC. With decades of experience creating comprehensive estate plans for clients from all backgrounds, our attorneys will ensure your estate plan complies with Texas law and accomplishes your unique goals. Contact us at 713-333-8900 to schedule a free consultation.