Your Legacy Is At Risk. Consider a Professional Trustee.

Your daughter, brother, friend, or neighbor may be perfectly capable of serving as your successor trustee, but there are many reasons they may not be the best choice. Let’s go back a step before we share why individuals you know and trust may not be ideal for this vital role. 

An important part of estate planning involves creating legal documents to manage your assets during your lifetime and after your death. One very effective tool for managing and distributing assets is a revocable living trust. The person or persons creating the trust are called the trustors. These same people, in the case of an estate planning revocable living trust, are also the initial trustees. Our clients consider carefully who will become the trustee of the trust after they are no longer able, and these individuals or professionals are called their successor trustees. Many people choose to appoint a family member for this role. While sometimes this works well, we also make sure our clients know that there are several advantages to naming a professional trustee to manage your trust when you’re gone.  

Avoid burdening those you love 

Acting as a successor trustee is not rocket science, but it is a completely different set of tasks than most people have had to do before. Wrapping up someone’s estate when they’re gone takes many hours of work carrying out duties they’re unfamiliar with. Not to mention that most people you might name are already quite busy with their own lives and maybe even children. We have found that professional trustees wrap up living trusts around three to five times faster than adult children or other individuals, and with much less stress for loved ones. 

Avoid conflict when emotion arrives, have professional trustee with an objective view  

Even in families that get along extremely well, the stress and pressure of wrapping up your trust can cause tension in relationships. All it takes is one decision that siblings don’t agree with to cause a rift in a previously happy family relationship, all when you’re no longer here to help mend it. 

By choosing a professional trustee, you can benefit from their objectivity in decision making. Unlike a family member who may be swayed by personal relationships or biases, a professional trustee is required by law to act in the best interests of the trust and its beneficiaries. This can help to preserve family harmony and reduce the risk of conflicts or disagreements among beneficiaries.  

You cannot put a price on family harmony. We have seen too many siblings fall into lifelong conflicts due to disagreements about the distribution of assets. We know two brothers who didn’t speak to one another for twenty years because one believed the other distributed assets unfairly. We couldn’t find any improprieties in his handling of the trust, but that didn’t keep them from ruining their relationship. 

Cases when a beneficiary cannot also be a trustee 

The most obvious case where a professional trustee works best is in the case of minor children or adult children who aren’t quite ready to receive a larger check all at once. Children under 21 do not have the experience and capacity to manage estate assets. A professional trustee could manage a trust for minor children until they become of age.  

Many of our clients hesitate, for good reason, to hand their trust over to their children when they reach the age of majority. Often, they will use a professional trustee to manage the trust as it provides distributions over a period of years. This design allows adult children to have the safety and security of a professional trustee, without potentially harmful family dynamics and resentments. This trustee manages the assets until beneficiaries reach an age with the maturity to take on more responsibility. Because some of our clients stagger distributions over 10, 15 or even 20 years, a professional trustee may be with the family for a long time.  

Another example of a situation where a professional trustee is a good idea is a special needs trust. Beneficiaries with developmental disabilities, for example, might not have the capacity to manage complex finances. In this case, a professional trustee ensures that trust assets will support vulnerable loved ones for years to come.  

A professional network with over 18 years in business: Give them a team of professionals.  

A professional trustee is typically a professional entity that specializes in managing trusts. They have the expertise necessary to manage your trust and handle the complexities that often arise, along with a team of professionals that can answer any questions related to tax advantages, investment strategies, healthcare, and legal issues that may arise during trust administration. Hammond Law Group has helped over 4,000 families plan and execute their legacies over the past 18 years. Our financial team includes an advisor with over 25 years of experience as a Certified Financial Planner. Rather than choosing a busy or inexperienced family member, you have the option to choose a team who can provide unmatched experience for your legacy.  

Experience with trusts, taxes, real estate, financial advising. Is your brother ready to be a trustee? 

Many revocable living trusts last only long enough to close out the original trustee’s estate. However, this often involves many months and significant paperwork. This will require at least filing one set of taxes for the deceased. Many of our clients set up trusts with staggered distributions over a period of ten, twenty years or more. Each year, trustees review investments, keep up real estate and file taxes. For generational trusts, the responsibility could go on for much longer. Why shoulder your children with the burden of managing the trust assets when you can hire someone to do it for them?  

Trusts that last longer benefit from trustee continuity.  

A professional trustee can also provide continuity in the administration of your trust. an individual trustee may resign or pass away. A professional trustee is a permanent entity that can ensure your trust is managed consistently over time. This is especially important for long-term trusts that will support beneficiaries for many years or generations.  

Why expose your trustee to liability? Professional trustees provide legal protection.  

In addition to providing expertise, objectivity, and continuity, a professional trustee can also help manage risk associated with the trust’s management. Professional trustees are held to exacting standards of care and are required to carry insurance to protect the trust’s assets. This provides protection for the trustors and beneficiaries. A professional trustee protects against legal or financial liabilities. They also help to identify and manage potential risks associated with the trust’s assets. A professional trustee will be on the lookout for investment risks or tax liabilities. While there could be additional costs associated with hiring a professional trustee, the benefits often outweigh those costs. This is especially true for trusts with complex assets or beneficiaries.  

Consult with a qualified estate planning attorney to determine if a professional trustee is the right choice for your trust. Be informed about your family’s future. Ask us if a professional trustee is right for your estate plan.  

In conclusion, appointing a professional trustee can provide significant benefits to providing for your loved ones. By choosing a professional trustee, you can benefit from their expertise, objectivity, continuity, and risk management skills. This can help to ensure that your assets are managed effectively during your lifetime and distributed according to your wishes after your death, to your family who still love each other. Further reading on Professional Trustees:

How to choose a professional trustee

Understanding Corporate Trustees

How to maintain family harmony when you’re gone

The five most common successor trustee mistakes and how to avoid them

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Author Bio

Catherine Hammond is the CEO and founder of Hammond Law Group, a Colorado-based estate planning law firm she founded in 2005. With a strong focus on protecting families from the legal consequences of disability and death, she creates comprehensive estate plans that minimize taxes, costs, and government interference.

A native of Denver, Catherine completed her undergraduate studies at Coe College in Iowa, and her Juris Doctorate from the University of Denver College of Law in 1993, concentrating on estate planning, tax, and mediation. Catherine is a member of various professional organizations, including WealthCounsel, ElderCounsel, the National Academy of Elder Law Attorneys, the Colorado Springs Estate Planning Council, and the Purposeful Planning Institute. Beyond her legal expertise, Catherine provides transformational coaching to support clients and their families through life transitions.

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