The trustee can be an individual, a corporate trustee, or a combination of both. Naming a trusted family member has some advantages, but a corporate trustee has expertise that a family member typically doesn't have.
Although competent adults can serve as trustee, most states restrict what entities can serve as trustee. Typically, only specified financial institutions or other entities recog- nized under state law can act as a fiduciary.
In California, the law allows for a wide range of individuals and entities to serve as trustees. This includes family members, close friends, professional advisors, financial institutions, and even corporate entities.
Anyone 16 and over (18 for an Unincorporated Association or Charitable Trust) who is not 'disqualified' can be a Trustee. The reasons for disqualification were set down by the Charities Act 2011, and were designed to prevent people convicted of financial crimes, or who made serious financial errors, becoming trustees.
A trustee can be an individual, such as a family member, friend, or trusted advisor (e.g., lawyer or accountant) or an institution, such as a bank or trust company. Each type of trustee has strengths and weaknesses which should be carefully weighed by the donor (see below).
All in the family
In most instances, clients select family member trustees for both emotional and financial reasons. Clients may believe that a family member will have an emotional attachment to the beneficiary of the trust and as trustee will stick with the job, come what may.
It is not unusual for the successor trustee of a trust to also be a beneficiary of the same trust. This is because settlors often name trusted family members or friends to both manage their trust and inherit from it. Naming the same person as trustee and beneficiary can be problematic.
Thus, for trusts that may last a long time, a corporate trustee is often the preferred choice. Impartiality: The trustee must be capable of being impartial among the beneficiaries. This is especially difficult to do if the trustee is one of several beneficiaries.
A trustee is a third party who is authorized by a settlor to execute and manage trust assets . A trustee holds the title of the trust asset. A trustee is a requirement of an express trust along with trust property , trust intent , and definite beneficiaries .
A trustee must abide by the trust document and the California Probate Code. They are prohibited from using trust assets for personal gain and must act in the best interest of the beneficiaries. Trust assets are meant for the benefit of the trust beneficiaries and not for the personal use of the trustee.
Final answer: A real estate broker typically lacks the legal authority required to be a trustee, making them the least likely among the given options to serve in this role.
Non-Relatives as Trustees
In California, a non-relative must be a licensed private professional fiduciary to manage an estate.
The trustee generally has the authority to withdraw money from a trust to cover the cost of third-party professionals, as well as any other expenses arising as a result of administration.
Being a trustee is also a role that can be quite time consuming, more so than most people assume. Depending on the nature of the estate, being a trustee can require quite a few hours, which can be hard to come by if the trustee also has a full-time job, a family, and/or other obligations.
There are five general duties of the Trustee – to be prudent, to carry out the terms of the Trust, to be loyal to the Trust, to give the Trust their personal attention and to account to the beneficiaries of the Trust. The Trustee must act reasonably and competently in all matters of the Trust.
Getting legal advice
Successor trustees can be your adult children, other family members, close friends, or a corporate trustee from a bank trust department or trust company.
Any individual, other than the grantor, may serve as trustee of a trust, including the grantor's spouse, children, family members, or friends.
And so the trustee of a trust, whether it's revocable or irrevocable, can use trust funds to pay for nursing home care for a senior. Now, that doesn't mean that the nursing home itself can access the funds that are held in an irrevocable trust. It's always the responsibility of the trustee to manage those assets.
A A Trustee is disqualified 'as Trustee' upon his death, loss of his legal competence, removal from trusteeship, liquidation, rescinding his licence or declaring his bankruptcy. The Trust shall then be transferred to the other Trustees in case of multiple Trustees, unless the Trust Instrument provides otherwise.
Individuals: Any competent person who is of sound mind and at least 18 years old can be appointed as a trustee. This is the most common scenario where individuals, often family members or close friends, are appointed to manage the trust.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.
In our experience, a carefully selected professional trustee is the better option for most wealthy families. In many cases, the ideal combination is to name a professional and a family member or trusted friend who can work side-by-side as co-trustees.
A trustee can end up having to pay taxes out of their own personal funds if they fail to take action on behalf of the estate in a timely way. Of course, they can also face criminal liability for such crimes as taking money out of a trust to pay for their own kids' college tuition. Yup, that's stealing.
The problem with having two related people as trustees is that governance should be about accountability, diversity and a balance of interests, and people who live together tend to have similar views and, consequently, can sometimes shut out other people.