This week we are going to focus on the trustee’s role in your estate plan. A trustee is someone who plays a vital role in any estate plan. Regardless of the type of trust, you create, or the purposes for which you created it, you need to know what a trustee is, what that person does, and why choosing the right trustee is so important. So, to help better explain their role in your estate plan, here are some common questions people commonly have about them.
What is a trustee?
A trustee is a person who manages a trust. If you have been reading our series on essential estate planning knowledge, you already know that a trust is a legal entity, or relationship, that allows for certain benefits. Depending on the type of trust you create you can use a trust to more efficiently make inheritance transfers, protect the inheritances of young people, reduce the amount of tax your estate might have to pay, as well as to secure many other kinds of benefits.
Yet when you create a trust and transfer property into the trust’s name, you are no longer the legal owner of that property. Instead, the trust will own it. So, in order to ensure that the trust property is managed properly, you will have to appoint a trustee to take over those management responsibilities.
Who is the trustee?
As the person who creates a trust you have the authority to select who you want the trustee to be. The trustee can be almost anyone as long as that person is a capable adult and is willing to serve. Further, organizations can also serve as a trustee. For example, if you want to establish a trust that will protect the inheritances you want to give to young grandchildren, you could appoint a bank or trust company as the trustee.
Determining which of the two types of trustees is best for your individual trust will depend on your circumstances, your desires, and many other factors.
What happens if the trustee dies?
If you select an individual trustee it’s possible that the person will one day no longer be able to, or will no longer be willing to, serve in the trustee role. Because of this, it’s always important to name successor trustees whenever you create any kind of trust. A successor trustee will be able to take over the trust management responsibilities in the event the original trustee is no longer able or willing to serve.
If you have questions about setting up a trust, contact us and we will try to answer your questions.