Myth #1. Only professional trustees (such as banks and other financial institutions) can receive compensation for their work.
A trustee is entitled to reasonable compensation under most states' laws. A trust may even include a provision allowing a trustee to receive compensation. Both professional and layperson trustees are entitled to compensation; however, the type of trustee may play a role in how much compensation the trustee receives. A professional trustee will usually provide their company's fee schedule, and, unless the rate has been stated in the trust agreement, a layperson will likely determine their fee based on several factors, such as the time spent doing trust tasks, the degree of difficulty in handling trust matters, the level of risk assumed in carrying out responsibilities, and the trustee's level of expertise.
Question #1. What important qualities should my trustee have to be successful in the role?
Being a trustee is a very important and often time-consuming responsibility. However, a trustee does not need to possess any superpowers or expertise in every area of trust administration to be successful. A trustee does need to be able to ask for help when needed. They should be able to seek assistance from and consult with financial advisors, tax preparers, and attorneys to fully carry out their responsibilities. The trust can even pay the fees for these professionals. But a trustee needs to know when they need help and be willing to go out and find that help.
It is also important that the trustee be detail oriented, because the trust administration involves specific legal steps. The trustee will be asked to compile a list of everything the trust owns and keep accurate records of income and expenses. Being too general with this information can cause tension between the trustee and beneficiaries and lead to legal action.
Being organized can also help ensure a smooth trust administration. Depending on what the trust owns, the number of beneficiaries, and the trust distribution plan, there may be a lot of moving parts. In addition to managing the trust, the trustee will need to make sure that they do not mix their personal finances or personal affairs with those of the trust.
A trustee must also have good communication skills.Although the trustee has authority over the trust, they are supposed to act in the best interest of the beneficiaries. It is important that the trustee clearly communicate with beneficiaries and be available to answer any questions that the beneficiaries have in a timely manner. Similarly, a trustee must be able to get along with the beneficiaries.
Lastly, a trustee must be able to follow rules. State and federal laws, as well as instructions within the trust, must be followed. While a trust may have provisions that allow a trustee to use their discretion in some matters, there are other instances in which the trustee is required to do certain things a specific way. Failing to comply with the rules can subject the trustee to potential civil and criminal penalties.
Question #2. Can I choose more than one trustee?
The number of trustees you select is up to you. You may decide that you want two trustees to act together at the same time. This is common for married couples who are the trustees of each other's trusts or their joint trust. If you choose to have two trustees act at the same time, you must make sure that they get along. You must also decide whether one trustee will be allowed to act without the other or if they must both be present when handling trust business. Keep in mind that the latter requirement may slow down the pace of the trust administration. It is also important for there to be a way to resolve any issues that the trustees do not agree on.
Alternatively, you may decide that you only want one trustee to serve at a time. In this situation, you need a list of successors—that is, people who will step up if your chosen trustee is unable to fulfill their duties. A benefit of using a trust is that it can avoid court involvement. However, to make sure that the court stays out of the trust's business, you must have a list of trustees or specify how a vacancy in the trusteeship will be filled.
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment