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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Who will you name as your trustee? Whom Should You Name as a Trustee? By Britt Erica Tunick If part of your estate plan involves setting up a trust for children or grandchildren, you may want to think twice before naming family members or friends as your trustees. One of the major benefits of establishing a trust is that the assets you put within it are shielded from probate and are immediately available to the individuals you are leaving them to. Another popular reason for using trusts is the ability to put parameters and conditions on them, such as the need for a child or grandchild to reach a certain age before they are able to access the assets being given to them through a trust which can be a good way of protecting assets until the people they are being left for are mature enough to handle them. At the end of the day, however, a trust is only as good as the trustee left in charge of it. And while a family member or friend may seem an obvious choice now, they may not be your best choice. Enforcing the conditions of a trust can be time-consuming and requires an individual who is unbiased and prepared to carry out the wishes of the individual who established the trust regardless of how a trustee feels about those wishes. When you realize that money frequently leads to strife within families; that the potential for conflicts of interest and even misappropriation of funds is not uncommon; and that friendships sometimes fade, the risks of naming family or friends as trustees can be significant. Instead, if a trust is part of your estate plan you should consider naming your bank as the trustee, which removes the possibility of conflicts of interest and ensures that the individuals left in charge are knowledgeable and focused on adhering to your wishes. While naming a bank as trustee introduces fees into the equation, the reality is that many trustees, whether family or friends, often take a fee for management of a trust. |
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