Trusts are a part of many estate plans in Carlsbad, California. If you have decided to include a trust in your estate plan, one of the most important decisions you will make is choosing the trustee. This decision should be made with a lot of thought and care. Your estate planning attorney can explain your options and guide you to the right choice for your situation.
A trustee is an individual or institution responsible for managing a trust and carrying out its purpose. They maintain and administer the trust property for the benefit of the beneficiary. The trustee must ensure that the grantor’s wishes are followed. The trustee’s exact duties will depend on the type of trust you create and its provisions.
Often the person who creates the trust (the grantor) acts as the trustee until their death or incapacitation. At that point, the successor trustee takes over this role.
You have broad discretion when choosing your trustee in California. The only legal requirements are that they are at least 18 years old and of sound mind. In general, there are three options: 1) a family member or friend, 2) a trust lawyer or accountant, or 3) a trust company or corporate trustee. Each option has its pros and cons.
1. Family Member/Friend
Many people name a family member or close friend as the trustee. These individuals are a good choice because they usually have a deep understanding of your intentions and family dynamics. However, because they are so close, they could get caught up in the drama or make decisions based on their own biases instead of treating beneficiaries equally.
Picking a family member or friend is usually the most cost-effective option. They often do not charge a fee (even though they are entitled to under California law). Although taking on the responsibility without payment can cause complications and lead to resentment in some cases.
2. Professional Trustee
A second option is to have a trust lawyer or accountant serve as your trustee. If they have worked with you for many years, they will have a thorough understanding of your wishes and family dynamics. Additionally, although they are usually more expensive than a friend or family member, they are typically less expensive when compared to a trust company or corporate trustee. A professional trustee does not normally have the same institutional structure as a trust company or corporate trustee and can act with greater flexibility.
3. Corporate Trustee
The third option is to name a corporate trustee, such as a bank or trust company. Typically, this is the most expensive option, but you know that they will have a complete understanding of the duties and responsibilities of a trustee. A corporate trustee also has the most structure and oversight. This means that decisions may take longer, and they may be stricter with investments and distributions.
A corporate trustee is a good option if there is the possibility of disagreements between beneficiaries (most common in blended families), the trust holds significant amounts of property, or the trust is likely to continue for multiple generations.
You must be able to trust that the individual or company you chose will act responsibly and carry out your wishes. Your trustee will have to make objective decisions, even when faced with complicated dynamics.
The trustee must have the time available to manage the trust. Responsibilities could include filing tax returns, selling real estate, maintaining and investing property, conducting appraisals, keeping records, and communicating with beneficiaries. The amount of work required will depend on many factors, including the type of trust and the amount of trust property.
The trustee must have the ability necessary to carry out their job. If you pick a family member or friend, they should at least have a general understanding of finances and a basic understanding of investing. The trustee can work together with a financial advisor, so it is not necessary for them to be an expert or a financial guru, but they must know when and how to seek support. If you pick a professional trustee or corporate trustee, you should ensure they are a legitimate and reputable company.
Andrew Fesler is an experienced Carlsbad estate planning attorney with over twenty years of experience. He is a qualified trust lawyer and can create a comprehensive estate plan that fits your needs. Contact our office today at (760) 444-0943 for a free consultation.