Question: Should I name a family member as Trustee for trusts I set up for my children?
Answer: It is common for family members to be named as Trustees. Most people can find someone in their family who is honest and trustworthy and financially responsible. Moreover, family members will usually serve for little or no compensation.
Some trusts are written so that the Trustee is restricted to act within certain confines. Still, because they are family, decisions may be made on an emotional basis, rather than what is required under the law.
If a beneficiary is not happy with a decision, the beneficiary could take legal action against the Trustee (which may make Thanksgiving an uncomfortable occasion).
If you do choose a family member as a Trustee, it may be best for that family member to seek professional advice before taking on the challenge of serving as Trustee.
One option that might be palatable for some is to name a professional or corporate Trustee to act as a co-Trustee with a family member. In such case, the hope is that the family member brings knowledge of the family to the table and the corporate or professional Trustee brings knowledge of investments and trust administration.
As always, if you have any questions or would like to learn more, please let me know.
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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