Most estate plans begin with the creation and execution of a Last Will and Testament. That Will may remain as the cornerstone of your estate plan throughout your entire life; however, an equally popular estate planning tool is a trust agreement. Opting for a trust in your comprehensive estate plan entails the selection of a Trustee to oversee its administration. Given the important role a Trustee plays in the success of a trust, choosing the right Trustee is crucial. With that in mind, the Essex Junction attorneys at Unsworth LaPlante, PLLC offer some guidance on appointing the right Trustee for your trust.
Trust Basics
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories â testamentary or inter vivos â the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Settlorâs Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place. Like a Will, a trust can be used to distribute your estate assets after your death.
What Are the Duties and Responsibilities of a Trustee?
A Trustee assumes the responsibility of managing trust assets and administering the trust in accordance with the terms set by the Settlor. Specific duties and responsibilities include:
- Managing and safeguarding trust assets
- Adhering to trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the “Prudent Investor Standard”
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Approving or denying distributions if given discretionary authority
- Maintaining detailed trust records
- Preparing and paying trust taxes
What Should I Consider When Appointing a Trustee?
One of the most common mistakes people make when they create a trust is to appoint the wrong person as Trustee. To help you avoid making that mistake, consider the following factors when choosing your Trustee:
- Experience, Skills, Education: Look for expertise in the financial or legal field to effectively manage trust assets and understand applicable trust administration laws.
- Ability to Respect Your Wishes: Choose someone who respects your wishes and is not inclined to impose personal opinions on trust matters.
- Conflict-Free: Ensure the Trustee has no conflicts with trust beneficiaries to maintain neutrality.
- Detail-Oriented: Prioritize individuals experienced in maintaining meticulous records, a crucial aspect of a Trustee’s role.
- Conflict Resolution Skills: Opt for a Trustee capable of resolving conflicts among beneficiaries without resorting to litigation.
- Willingness to Serve: Confirm the individual’s willingness and ability to serve as Trustee before making the appointment official. Discuss the appointment with the prospective Trustee beforehand.
Always consult with your estate planning attorney when making important decisions, such as the appointment of a Trustee, to ensure that you are considering all relevant factors.
Do You Have Questions about Appointing a Trustee for Your Trust?
For more information, please attend one of our upcoming FREE webinars. If you have questions about how to choose the best Trustee for your trust, contact an experienced Essex Junction trust attorneys attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.
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