Careful Consideration Required Before Selecting A Trustee

A trust is a centerpiece of many New York elder law estate plans. Trusts are usually superior to wills for transferring assets at death. Trusts are preferred because they can be used to avoid probate, reduce estate taxes, protect children from earlier marriages, and more. Essentially these entities remove assets from a personal estate and place it in a trust so that more wealth can be given to beneficiaries.

Transferring assets to a trust means that a trustee must be designated to manage the entity and its assets. Therefore, selecting an appropriate trustee is an important aspect of the New York estate planning process. A Yahoo Finance article this week discussed the role of the trustee and the need to give careful thought to trustee selection. Those who create a trust usually chose between an individual trustee (often a friend or family member), a professional trustee (like a bank, lawyer, or trust company), or a combination of both.

Trustees have a fiduciary duty to the beneficiaries of a trust, and so it is vital to select a trustee who can fulfill that duty. Trusts require the trustee to appropriately balance the needs of a current beneficiary while preserving capital for future beneficiaries. In addition, trustees must be able to file annual fiduciary returns. While friends and family members will usually try to act in the best interests of beneficiaries, they are often inexperienced with trust management. Difficulties often arise when family issues conflict with the best interests of the beneficiaries. Also, a trust may be held in limbo if an individual trustee dies or becomes incapacitated in some way.

In many cases a professional trustee is a prudent choice. The article notes that “while trustees often do an acceptable job of completing basic tasks, conflicts and problems can arise when trustees don’t understand where their loyalties should be and how to deal with the complex financial issues that can come with the job.” Banks, lawyers, and trust companies are capable of providing the management services needed to maximize the value of a trust. In addition, a professional trustee will not come with potentially distracting family conflicts. In these ways, choosing a professional trustee is often the best way to ensure quality, consistent management of a trust.

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