Death, Taxes, and…Choosing the Right Trustee

Yes…you will die or become disabled someday!  So…at some future date a trustee may be responsible for the financial well-being of your spouse, children, and other loved ones.  

Choosing the right trustee may be one of the single most important decisions you will ever make.  To understand why, let’s briefly examine the typical duties and responsibilities of a trustee.  They include the following:

  •  Hold and manage trust property (i.e. traditional investments, real estate, and other assets),
  • Evaluate and make tax decisions related to the trust which affect your family,
  • Make distributions of income and/or principal to trust beneficiaries as directed by the terms of the trust,
  • Routinely communicate with the trust’s beneficiaries, including but not limited to explaining the trust’s operation and responding to questions from beneficiaries,
  • Accurately maintain records of all trust activities and transactions,
  • Provide beneficiaries with statements and tax reports,
  • Make reports to the probate court if and when required, and
  • Treat all trust beneficiaries with impartiality.

These responsibilities are serious, complicated, and demanding – often beyond the capabilities of many individuals asked to serve as trustee.  For many families, a professional or corporate trustee is a much more suitable choice.

Why should you consider a corporate trustee?  Your family deserves the best possible care!  A professional trustee has the right combination of service qualities, technical skills, objectivity, and resources necessary to properly fulfill the role of trustee. Consider the following points.

Experience – A corporate trustee manages all kinds of trusts on a daily basis. Trust officers and other staff are highly trained and experienced in all aspects of trust administration.  In addition, they are sensitive to the needs of your loved ones and recognize the importance of working closely with other members of your estate planning team (i.e. attorney, CPA, etc.).

Professional Investment Management – Your assets will be managed by highly-capable investment management specialists who will craft and execute an appropriate investment strategy, one that is consistent with your trust while considering the needs and circumstances of beneficiaries.

Impartiality – Family relationships are often complex and have potential for conflict. Individual trustees may be biased, vulnerable to pressure from other family members, or unable or unwilling to fulfill their duties for a variety of reasons. A professional trustee will not be vulnerable to these forces and will execute its duties objectively, competently and professionally.

Availability – Any delay in the administration of your trust may result in adverse or unexpected consequences for your loved ones. An individual trustee may become ill, die, become preoccupied with business or personal matters, take an extended vacation, or, perhaps, become incompetent. This is not true of a corporate trustee that is permanently and reliably available to serve you and your family.

Accountability – Unlike that of an individual trustee, the conduct of a corporate trustee is subject to regular and rigorous review by independent auditors and examiners.

Take a long, hard look at your financial situation and family circumstances.  If you’re still not sure, consult with your estate planning attorney.  Greater Madison area residents are fortunate to have many excellent estate planning attorneys available to serve.

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