The main goal of estate planning is to protect assets and provide easy wealth transfer to loved ones and future generations. You work hard to build your assets, and estate planning can ensure that your heirs receive as much of your property as possible. Many establish trusts to manage and maintain assets, protecting them from creditors and lawsuits.
Trustees are chosen to shoulder the responsibility of overseeing the trust. They take on the responsibility of distributing trust assets and preserving the grantor’s goals for the trust. The grantor is the person who established the trust. Serving as a trustee is a big responsibility, and choosing the right person to serve is essential to the trust’s success. This article will discuss the trustee’s role, their duties, and how to choose the right person for the job.
How to Choose the Right Trustee
Choosing the best person to serve as your trustee should not be taken lightly. This individual will be responsible for a long list of activities that can make or break your goals for your estate. Your trustee should be capable and committed to completing their fiduciary responsibilities to the trust. They should be honest, intelligent, and able to learn new skills if needed.
Many people make the unfortunate mistake of choosing friends or family members who don’t possess the suitable capacity to handle the rigors of serving as a trustee. While friends and family could potentially serve, they should be vetted to ensure they are up to the task. Another more practical option is to hire a professional trustee to serve. They may be better suited to make critical, unbiased decisions that friends or family may not be able to make. A professional trustee or corporate fiduciary will be impartial and competent.
Another essential factor to consider is your chosen trustee’s availability. While serving as a trustee shouldn’t take all their time, they should be available to handle issues when they arise.
Trustee Obligations
All responsibilities of a trustee fall under their obligation to protect trust assets and remain faithful to their fiduciary duties. A wide range of trustee responsibilities center around those two primary obligations. They are bound by their duty to always act in the best interest of the trust and beneficiaries. A trustee must manage trust assets, relay information to beneficiaries, and ensure the trust complies with the law. Trustees must also keep records for the trust and pay taxes when appropriate. If the trust owns investments, the trustee must monitor the accounts to ensure they are correctly invested to protect the assets’ value.
Asset Distribution and Maintaining Trust Objectives
Trustees have the difficult job of balancing the trust’s objectives with trust distributions. There is a delicate balancing act between protecting the trust’s purpose and maintaining the beneficiaries’ financial needs. The trust document provides instructions for the trustee to follow when making asset distribution decisions. A discretionary trust provides more flexibility to trustees regarding distributions and allows them to plan for the unpredictable. Beneficiary financial needs may not be entirely known when the trust is established, and a discretionary trust provides options.
Trustees and beneficiaries must be able to communicate for the relationship to work effectively. Open communication helps build trust and makes the process of trust distribution easier. Trustees must also ensure trust distributions are tax efficient and comply with Louisiana laws.
Trustee Legal Obligations and Liability
Trustees face potential liability if they do not fulfill their legal obligations to the trust and beneficiaries. Trustees may be personally liable if they breach their fiduciary duty, fail to meet their legal obligations, or commingle trust assets. A prudent trustee can easily avoid issues by consulting with an estate planning attorney and carrying a personal liability policy. Many trusts also provide trustees with indemnity if they made good faith decisions and didn’t intentionally harm the trust. However, speaking to an attorney is always in a trustee’s best interest.
Benefits of Consulting an Attorney
Consulting with an estate planning attorney is the best way to ensure that laws are properly followed and that each party fully understands their role. An attorney can explain the responsibilities and duties of a trustee and draft the trust document. They can answer any questions about choosing a trustee and provide legal assistance throughout the life of the trust.
Contact an Attorney
Progeny Law Firm assists clients with estate planning in Baton Rouge, LA. Call (225) 465-1090 or contact us online for a free consultation. Sign up for our free educational seminars.
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