A trust is a legal arrangement that allows you to distribute trust funds and assets to beneficiaries. Additionally, you can use a trust to protect assets from disputes between family members, probate delays and debt collection. When drafting a trust, one of the most important decisions is naming a trustee.
Assets that are part of the trust are the responsibility of the trustee. A trustee holds a legal title to assets in a trust. They are legally obligated to fulfill the intent of the trust on behalf of the grantor. Who you pick to be a trustee must have the best interests of the trust and your beneficiaries. There are several considerations to make when appointing a trustee. Here is what you should know:
How do you pick a trustee?
You can name a family member or friend to manage your trust. Someone close to you is likely to understand the intent of your trust. They may also know your beneficiaries personally. However, having a loved one as your trustee is not always as simple. The role of trustee often requires a deep understanding of the fiduciary obligation that comes with managing a trust. They also must be ready to take on a great financial burden and understand the time commitment and trustworthiness that comes with the role.
It can help to talk to a potential trustee to help them understand what duties they are expected to fulfill. Here are some topics to discuss:
- Record keeping: A trustee must be prepared to record all changes to the trust, prepare records and statements and potentially prepare the trust for future generations.
- Communicate with beneficiaries: A trustee must keep beneficiaries informed about any changes to the trust that could impact them.
- Administer assets: A trustee must know how to distribute trust funds and assets to beneficiaries according to the terms of the trust.
Before picking a trustee, you may need to reach out to professional legal guidance to learn more.