Using a trust as part of your estate planning process offers many benefits. It gives you more control over the long-term use of your assets and can even protect you during retirement. Trusts limit tax liability and can even allow your beneficiaries to avoid probate court after you die.
In addition to deciding how to set up your trust, what structure to use and what assets to fund it with, you will have to name someone as trustee. The right trustee is crucial to the successful administration of the trust. There are multiple different trustee solutions that might work for your needs.
You can appoint an individual to serve as trustee
The most common solution is also the most straightforward one. You can pick someone with a history of trustworthy and responsible behavior to manage and administer your trust. Ideally, you will pick someone who has the time and energy to devote to managing the trust and who will live for some time after your death.
The downfalls of naming an individual as your trustee are that there is little oversight if that person does something inappropriate. They might also die or wind up incapable of performing their duties.
You can name multiple people to serve as co-trustees
If you worry about inappropriate behavior, incompetence or age, naming co-trustees can be a workable solution. Two or more people can share the responsibilities of administering the trust. They serve as a form of oversight to prevent abuses and offer redundancy so that you aren’t left without a trustee if someone unexpectedly dies.
You can hire a corporate trustee
If you want the trust to persist for multiple generations or if you don’t want to place the burden of its maintenance on any one individual, it may make sense for you to hire a corporate trustee.
A business serving as trustee has the same fiduciary duty to the trust and beneficiaries that an individual would. There is added protection of intergenerational support and reduced likelihood of a conflict of interest that affects your estate.
Creating a trust can be a great protection for you and the people you love, provided that you spend enough time thinking about the implications of each decision and making sure the trust documentation adequately communicates your wishes.