If you’re setting up a trust for your children, you should know that there are many factors that go into choosing a trustee. You’ll need to find someone who is capable and trustworthy, but also the right fit for your child’s personality. With this article we’re sharing all our tips on how to choose a trustee for your children’s trust.
What is a trustee?
A trust is an arrangement including two parties, the trustee and the beneficiary. One party (the trustee) holds legal title to property for the benefit of another party (the beneficiary).
The trustee usually is a person but can also be an institution or company. They have to carry out the terms of the trust. Additionally, trustees make sure that it benefits the beneficiaries you’ve chosen.
A trust company, on the other hand, is an institution. It also administers trusts on behalf of individuals and entities.
A trustee might be necessary for your children
If a trustee is necessary for your child, you must choose one. This is of course for the case that you have or plan to have a trust for your kids. We cannot highlight enough how important a trustee is going to be for your children. After all, the trustee is responsible for managing the trust’s assets. They later distribute them to your kids when they reach adulthood – or at the ages you’ve designated. A parent or sibling may be able to serve as a suitable trustee. however, that’s not always a great idea. We talk about that below.
You need a skilled and capable person as your trustee
A trustee has to have the knowledge and experience necessary to manage the trust assets. They must also have enough time and resources available to take on this role.
It is important that you select a trustee that can fulfill these requirements. Your choice of trustee will determine how well your children’s trust performs in the future, so it’s vital that you choose wisely.
What personality traits should you be looking for?
You should be looking for someone who is trustworthy, reliable, responsible and honest. You also want to find an ethical person who will make decisions based on your wishes and the best interests of your children.
The ideal trustee would have patience and compassion. They won’t be easily frustrated while dealing with a difficult situation or person. If they find themselves in a difficult situation, they should have the ability to work things out calmly. A bad trustee would instead get angry or upset by it. This could cause resentment among other family members. And that’s especially true if they get too heated during arguments about money management issues.
A close relative can be a trustee
Parents, siblings, or other close relatives can indeed be trustees of a trust. This is often the a smart and good choice. After all, you’re trusting that person to make decisions in the best interests of your child and manage their assets wisely. It’s important to choose someone who has good judgment and resilience. You should expect challenges to come up for your trustees when they’re managing the trust assets.
You may want someone other than a family member to serve as trustee for your children’s trust. That’s fine, you just need to think about whether this person will be able and willing to do what is required by law. Your choice could also affect how much money is available for your child: Some states have laws regarding who can serve as trustee. That’s especially true for certain types of trusts such as irrevocable life insurance trusts (ILITs).
Disadvantages of making a relative your trustee
There are also some disadvantages to making a relative your trustee. First, you’ll need to make sure that they’re capable of handling the job. You don’t want to put someone in charge of your child’s money who isn’t savvy enough with finances. Or someone who simply doesn’t have time for it. That can lead to potential problems down the road, such as financial mismanagement or negligence.
Second, maybe your relative is not completely honest about their ability and willingness to do this work. If you find that out too late you may end up with serious trust issues on both sides. We’re sure you’ve heard of family feuds before.
A financial institution can be your trustee
If you choose a financial institution to serve as your trustee, it will have access to all kinds of resources and expertise.
It may be best suited for some people who need help setting up the trust. For example, maybe you don’t have time or ability to do so yourself. Or you may want someone else to take care of things on your behalf. In this case, working with someone who knows what they’re doing could be crucial.
Disadvantages of making an institution your trustee
However, there are drawbacks. Financial institutions can often charge higher fees than other types of trustees (though this isn’t always the case). Additionally, some people don’t like working with large institutions because they might feel impersonal. That’s particularly true for people who are dealing with them over long periods of time (like when making changes).
Many people who have chosen this route have reported bad experiences with banks. Either because they weren’t satisfied with their service or because of the fees banks charge for acting as trustees.
Choosing a good trustee can be challenging. A trustee is responsible for managing trust assets, distributing distributions from the trust and investing any remaining funds. So choosing one for your kids is even more complex! Choosing a trustee may seem like an easy task. However, you should consider your options carefully before making your final decision. And of course, we’re here to help too!
Myend offers the perfect estate and end-of-life planning for all! This way you can choose the best solution for you! Our plans also include a Testamentary Trust – a trust within a will. Have a look here to learn more. And if you’re ready for action, sign up today for your free account! The estate planning of the future is here today.