Should I Name a Family Member as My Trustee?Share this post
Family Member as Trustee
Choosing a trustee is crucial whether establishing a new trust, modifying an existing trust or dealing with a transition of the incumbent trustee. Selecting the person or institution who will act as your trustee is one of the most important decisions you and your family will make. Naming a family member as your trustee is very common. Many families want to keep everything “in the family.” To many it is natural for them to consider using a close family member such as a parent, sibling or cousin for this important position. It is also natural to worry if this choice will come back to haunt you later.
Using a relative as your trustee can offer several advantages. He or she would likely: Share your values and understand the family legacy and any family businesses. Be able to keep in mind the settlor’s objectives in creating the trust. Although family representative will usually serve for little or no compensation, they may not be the best choice for a trustee. While the trust may allow for some discretion, some family members are prone to make decisions on an emotional basis. Most times, the family member is not an experienced trustee and does not know what is required of him or her under the law. If they make mistakes, they may face the wrath (and legal action) of the beneficiaries, or the beneficiaries may be unwilling to take action, and your plans and goals for the beneficiaries are not fulfilled. If you do choose family as a Trustee, it is best to train them for the responsibility before you die. Perhaps your attorney or advisor provides successor trustee training, or you can spend time educating them now, before they are called upon to act.
Can I Have a Corporate Trustee and Family Member Trustee Act Together?
Yes. A corporate trustee and family member trustee can act as co- trustees. In fact, this is sometimes a way to get the best of both worlds. The family representative brings knowledge of the family situation, and the corporate trustee knows how to invest and maintain records.