Max Alavi, Attorney at Law, APC has 6 locations in Orange County and Los Angeles County, California
Most people understand that it is important to draft and execute a trust or some type of estate planning instrument. However, some are not sure about the how to go about selecting the right Trustee to manage trust assets. Unlike an executor of a will, a Trustee’s duties to the trust can run for many generations rather than simply ending when the estate is closed. Choosing the wrong person as Trustee can result in a mismanaged trust where assets are squandered and the creator’s intent is not carried out. The right person will ensure that the trust is properly managed in accordance with the wishes of the trust creator.
Duties of Trustee
Primary responsibilities of a Trustee include: collecting trust assets and property, investing the trust assets and money, paying bills and taxes of the trust, navigating and filing annual or quarterly accountings and managing money for the trust beneficiaries. The Trustee is also responsible for regular communication among the beneficiaries in order to issue checks and authorize withdrawals against the principal.
Powers granted to the Trustee are limited to the terms of the trust. This means that it is essential for the creator of the trust to describe the type of powers he or she wants the Trustee to have. These powers can be limited or broad depending on the nature and purpose of the trust. However, it is generally a good idea to give the Trustee some latitude when it comes to investment options because of the unstable and ever-changing nature of the economy.
Choosing a family member as a Trustee versus a professional Trustee
Choosing the right person, or people, to be the Trustee of your trust can be a daunting task. Most people tend to choose a family member or loved one as a Trustee because the option is safe and comfortable. While there are no formal requirements a Trustee must meet to be designated, a Trustee should be competent and possess at least some basic financial knowledge. This family Trustee option is popular because family members generally do not require compensation and can be expected to act in the years to come. However, family conflicts and a lack of financial expertise can hinder the designated Trustee’s ability to carry out the trust as specified. While a professional Trustee, such as a bank or trust company, will charge a management fee and can tend to be impersonal in nature, this option eliminates any family conflict issue and can be beneficial to the overall trust because of financial and investment expertise.
The designated Trustee should also be someone with whom the beneficiaries are comfortable because the Trustee will ultimately be responsible for the disbursement of trust assets to the beneficiaries. It is also a prudent decision to choose a successor Trustee. Multiple successors can be chosen based upon preference and circumstances. Because no one Trustee can live forever, a bank or trust company should be designated as the final successor Trustee in order to ensure a smooth transition into the years ahead.
Finally, a trust protector can be designated in the trust to allow the relatively simple path to the removal and replacement of an ineffectual or unworthy trustee
The attorneys at Alavi & Broyles understand that choosing a Trustee is an important decision that individuals should decide for themself. Alavi & Broyles has expertise in helping those planning their estates choose the best Trustee for their trusts.
Max Alavi focuses on assisting clients establish effective and secure vehicles for passing their assets to their loved ones and protecting their families from the uncertainty and expense associated with probate and testamentary guardianship matters. He is also dedicates a significant portion of his practice to complex probate matters, trust administration and litigation of contested trusts.