Many people include trusts in their estate plans or even in their long-term care planning when they get close to retirement age. Trusts can reduce the value of your estate, help you qualify for Medicaid or protect your assets from taxation and creditor lawsuits.
However, a trust requires a trustee to manage the assets and distribute them when appropriate. What are three of the most common solutions for naming a trustee in modern estate planning?
Naming an individual trustee
If there is someone that you personally believe can handle the assets and fulfill your instructions, you may name one person as a trustee.
That individual will have a straightforward time managing the trust, but there are risks to this approach. One person can make mistakes that diminish trust assets or succumb to temptation and embezzle.
Some people would prefer the oversight of two or three people sharing the role of trustee. Co-trustees often all need to agree on or approve transactions and decisions that affect the assets in the trust.
Having more than one person involved can slow down trust administration, but it can also reduce the risk of incompetence or greed affecting the trust.
Hiring a professional trustee
There are businesses that offer fiduciary services for people creating or already managing a trust. They can serve as a corporate or professional trustee.
This approach can be useful for those who don’t have family members to manage the trust. It can also help those who want to establish a trust that persists for generations, like a scholarship fund.
Exploring all of your options can help you make the most of the creation of a trust.