ESTATE PLANNING CINCINNATI: CHOOSING A SUCCESSOR TRUSTEE?
Once you have decided that a revocable living trust is going to be part of your estate plan, you will need to decide who will serve as the Successor Trustee in the event of your disability or death.
The successor trustee’s primary role is to manage the assets of the trust and follow the terms of the trust. The successor trustee has a fiduciary duty to serve the interests of the beneficiaries and has a duty to act in a prudent manner.
When choosing a successor trustee the candidates generally fall into three categories: (1) Family, including your spouse and children, (2) Advisors, such as an attorney or accountant, and (3) Corporate trustees such as a bank or trust company.
Choosing a family member to serve as your successor trustee is the most common choice. Family members can usually be trusted, they have a good understanding of the family dynamics, and will usually charge a lower fee (if they charge one at all) for serving as the trustee. But what if your family members cannot be trusted, or they are unsophisticated in matters concerning money and finances, or they just do not have much time because of work or family? In that case, you may want to consider another option.
Choosing an Advisor
Many advisors have a close relationship with their clients, making them a good choice as successor trustee. Most accountants and attorneys understand the client’s goals, are impartial and have the necessary sophistication to handle financial matters. However, many advisors are not privy to the nuances of the family’s dynamics and will charge fees for serving as trustee. Unlike attorneys or accountants, it is also worth noting that most financial advisors are prohibited from serving as trustee for their clients by various state and federal regulations.
Choosing a Corporate Trustee
Corporate trustees have the experience and infrastructure to manage trust property in a very efficient manner and are completely impartial when dealing with the beneficiaries of the trust. Corporate trustees make a living serving as trustees, which means the fees and charges could be substantial. A corporate trustee is also less likely to be in tune with your family’s needs, values, or other important family dynamics.
The decision of who should serve as your successor trustee is very important and should not be taken lightly. In addition to the other qualities discussed above, your successor trustee must be honest, organized, and receptive to seeking out advice from an experienced estate planning attorney and other financial professionals.
Paul Kellogg is an attorney in Cincinnati with the Phillips Law Firm, Inc. Paul’s practice focuses on providing comprehensive estate planning and probate services to families and business owners, as well as serving as outside general counsel to entrepreneurs and businesses where he provides guidance and advice on a wide variety of transactions and disputes. He can be reached at (513) 985-2500 or via email at [email protected]. Please explore Paul’s other articles on estate planning and business on the Phillips Law Firm Blog page.
The article is for educational and informational purposes only and does not constitute legal advice. Anyone contemplating taking legal action is urged to obtain proper legal advice from an attorney licensed in your particular jurisdiction.