How to Choose a Trustee: Family or Third Party
Setting up a trust helps protect your assets and how they are distributed during your life and for future generations. The role brings with it a lot of responsibility. Consider the following before you select a trustee.
Q: What types of things does a trustee oversee?
A: A trustee has a variety of responsibilities. Those may include a personal property inventory and auction, real estate appraisal and possible sale, preparation of required personal and fiduciary tax returns, prudent investment management of assets, reporting to beneficiaries, paying bills, closing credit cards and compliance with legal requirements. A corporate trustee would have the expertise in these areas, while an individual would have to separately employ professionals in these areas to achieve the same level of administration, which could mean an increase in the fees that would be payable out of the estate or trust assets.
Q: What should I consider if I choose a family member?
A: Most families experience some conflict and disagreements over time. Should you choose a family member to administer your trust, it could be difficult for that person to do so without bias against another family member. The trustee could feel pressured against making a particular distribution. Whomever you choose should be astute and responsible with money and understands how to work with a wealth advisor. It might help to consider a co-trustee arrangement in which a family member is a co-trustee with a corporate trustee. In that instance, to avoid potential family conflict, the corporate trustee could be solely responsible for discretionary distributions to the co-trustee family member.
Q: What are the advantages of choosing a corporate or third-party trustee?
A: Corporate trust providers are in the business of administering trusts and estates, so they have the experience related to the efficient, compliant administration of an estate or trust. In addition, they are regulated and are scrutinized by external agencies and internal auditors to help ensure they are properly administering trusts. A corporate trustee is a neutral party; a fiduciary that is required to administer trusts in an unbiased manner and according to its terms.
Q: Are there other options when choosing a trustee?
A: Yes. You could consider a lawyer or accountant who is familiar with your family and someone you have worked with over time. Also, consider giving someone you trust, such as a spouse, the ability to remove and replace the trustee should that be needed.
Q: What happens when a beneficiary sues the trustee?
A: If your trustee is a family member, then that person’s personal assets could be at risk in relation to the suit. A corporate trustee, on the other hand, is highly regulated so the beneficiary should have the option of liability insurance to satisfy the suit.
Consider Consulting With Your Wealth Advisor
As you decide who to use as a trustee, consider reaching out to your wealth advisor. At Mariner Wealth Advisors, our trust services are provided by our affiliate, Mariner Trust Company, which has the fiduciary responsibility to administer your trust in a way that’s compliant with all of the laws and according to your wishes.
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Estate and trust services provided by Mariner Trust Company, LLC (“MTC”) an affiliate of Mariner Wealth Advisors. MTC is a state-chartered public trust company organized under the laws of South Dakota and serves to provide its customers with administrative trust services and other related services. This article is limited to the dissemination of general information pertaining to Mariner Wealth Advisors’ investment advisory services and general economic market conditions. The views expressed are for commentary purposes only and do not take into account any individual personal, financial, or tax considerations. As such, the information contained herein is not intended to be personal legal, investment or tax advice or a solicitation to buy or sell any security or engage in a particular investment strategy. Nothing herein should be relied upon as such, and there is no guarantee that any claims made will come to pass. Any opinions and forecasts contained herein are based on information and sources of information deemed to be reliable, but Mariner Wealth Advisors does not warrant the accuracy of the information that this opinion and forecast is based upon. You should note that the materials are provided “as is” without any express or implied warranties. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
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