Creating an estate plan includes assigning a person (or persons) to three different roles: one to oversee financial affairs if you are incapacitated—Power of Attorney—the second to be the successor trustee of a trust and the third to be the executor of your will. According to a recent article from Kiplinger, these people are critical to caring for you while you are living and after you have passed. The title says it all: “How to Choose Your Trustee or Executor of Your Will.”
The person managing your estate and the Power of Attorney may have broad discretionary powers, so you’ll want to be sure they are prepared to follow your wishes, even if they aren’t the same as their own. All three are considered fiduciaries and have a legal duty to put your interests above theirs.
Trustee duties depend upon the directions in the trust. If a trust owns a family business, farm, or a portfolio of investments, you’ll want a trustee who understands your family’s business, farm, or investments. The trustee should know they can hire advisors and others who help them if they are unfamiliar with the assets in the trust and recognize a need for professional help.
Trustees need to read the trust and its provisions and understand its requirements. An estate planning attorney can help the trustee become more comfortable with their role. A letter outlining the grantor’s intent, the reason for the trust and desired goals will also be helpful.
Many people choose their child or the guardian of a minor child to be their successor trustee. Taking on this role should be discussed with the individual before the trust is finalized. If the trustee is asked to oversee assets for a minor child until they turn 30, it’s a long-term commitment. If the trustee is also the guardian of a child, the trust language should clarify if the assets are to be used for the child’s maintenance.
A non-family member is sometimes better if the family can pay the fees. An estate planning attorney or a professional trustee can take on this role. The professional trustee typically charges a percentage based on the value of the trust assets. Fees based on the value of the entire taxable estate may not make sense if the trust is simple and doesn’t require a lot of management.
A consultation with a skilled estate planning attorney should include discussions of who is available to serve as a successor trustee. There are very few situations that estate planning attorneys haven’t seen. They can help determine even the most complicated family dynamics to name a trustee.
To learn more about estate planning in the East Valley, Gilbert, Mesa and Queen Creek, schedule your free consultation with Attorney Jake Carlson by using one of the links above.
Y Reference: Kiplinger (April 25, 2024) “How to Choose Your Trustee or Executor of Your Will”