Personal trustee - Is often a sibling, other family member, or friend whom you trust. You know they will love your child, however, they may be unprepared to assume the many roles and responsibilities with which he or she may have been entrusted.
- It is key is to provide successors to the trustee allowing them to step down if their personal needs change.
- If you do not want to ask them to take on the fiduciary role, but still want them to have a hand in meeting the needs of your child, you can ask them to serve as a family trustee to provide oversight on your child’s behalf.
- Make provisions in your trust that the personal trustee will be compensated in some way in the event this role takes more time than expected.
Professional trustee - Is often an attorney, accountant, or other professional whose practice specializes in SNTs or other trusts.
- Be sure to interview, get to know and check references before hiring. Their philosophies should align with yours.
- Ask about:
- their experience with other beneficiaries who have needs and abilities similar to your child’s,
- their fees,
- and their succession or back-up plan.
- Who do they use for financial management of the trust assets or will they work with your investment advisor?
- Your attorney or financial planner should be able to recommend one or more professional trustees they can also work with.
corporate trustee - Is often a bank, trust company, or other financial institution.
- Often times the fees are higher than a professional trustee’s, but this may be necessary for the amount of money to be funded in your child’s SNT or for other reasons you feel important.
- One benefit of selecting a corporate trustee is the structure and oversight they provide to the trust administration and input in making some potentially difficult decisions. If your child’s needs are complex or they may be problematic to other trustees, or there are no family or personal trustee options in your child’s life, then a corporate trustee is worth considering.
- Be aware that a trust company may be difficult to remove or may be stringent in their decision-making process for distributions.
- Ask how the corporate trustee is compensated. In the event the trustee is paid a percentage of assets in the trust, there may be an incentive not to make distributions from the trust. Since the goal is usually to enrich the beneficiary’s life by using distributions from the trust, the above compensation arrangement may be in conflict with the goal of the trust.
- If your desire is to have the assets in the trust spent down over the course of your child’s lifetime, there may be a conflict of interest that needs to be addressed prior to selecting a corporate trustee.
- If you do decide to name a corporate trustee, be sure to include provisions for someone such as a family member, trusted friend, or advisor to remove and replace the trustee with another trustee.
Co-Trustees, Family Trustees, and Trust Protectors - While co-trustees lift the fiduciary responsibility and needs of the trust from just one person, but doing so may cause additional complexities.
- In most cases where siblings or family members are co-trustees, both can receive statements from the trust account, make decisions on spending, and be engaged in discussions with the financial advisor and the beneficiary, but only one is writing checks, filing the taxes, and keeping trust records.
- You may name a personal trustee and a professional trustee as co-trustees if they are willing. Often times the professional trustee performs all of the fiduciary roles; they are responsible for all financial matters, bill paying, investment decisions, tax preparation and reporting to any government agencies when or if the trust comes in question. The personal trustee oversees what the professional trustee is doing and provides input on behalf of the family and the beneficiary.
- You can also name afamily trustee(or personal trustee) or atrust protector(often the family attorney) who could work with the professional or corporate trustee to keep in mind the family values. The family trustee or trust protector may also have the authority to remove a professional or corporate trustee and replace them with a new professional or corporate trustee if they feel the need to do so.
- Overall, providing flexibility and succession to your trustees is helpful when done properly in the context of the trust. Once the trust is funded, the ability to change trustees is limited by the provisions you have stated in the document which may not provide for any flexibility.
