Can you trust the trustee?
For those leaving property and other assets to heirs via a trust, one of the most important estate-planning decisions you will make is deciding who will run the trust after you are gone. Your chosen fiduciary will, among other things, be responsible for managing the assets the trust owns and making distributions to your loved ones in accordance with your final wishes.
The job typically requires a hefty investment of time—some trusts are set up to last for generations—and at least some knowledge of estate-tax law and money management. But these ostensible duties are tied to a deeper purpose: Your trustee must be able to put aside his or her personal feelings to do what you have instructed or what you would have wanted.
Many people designate an individual—often a family member, close friend or business associate—to be the trustee. Others feel better hiring a professional, such as a bank or trust company, to do the job. To help determine which option is best for you, consider these key questions:
1. How large and complex are the assets in the trust?
The fees paid to corporate trustees are likely to exceed those paid to individual trustees, who can and sometimes do waive the fees to which they are entitled. Professionals typically get paid based on the percentage of assets they have to manage and sometimes charge a minimum fee, which can make their services costly for more modest estates.
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