The Trustee should be someone who can get along and have a good relationship with the beneficiaries of your trust. They should also possess good record-keeping abilities. In many cases, you may want to consider appointing co-trustees. A Trustee is required to abide by the terms of a trust.
Generally, an executor administers the estate of the person who died, while a trustee administers a trust for the benefit of the named beneficiaries.
In addition to following all directions in the trust document, the trustee is responsible for: Assuming legal responsibility for administration of the trust. Taking control of and protecting trust assets. Handling accounting responsibilities of the trust.
Generally speaking, once a trust becomes irrevocable, the trustee is entirely in control of the trust assets and the donor has no further rights to the assets and may not be a beneficiary or serve as a trustee.
The trustee manages the trust and distributes its assets at a prescribed time. The trustee is in charge of managing the assets in an irrevocable trust while the grantor is still alive.
Selecting the wrong trustee is easily the biggest blunder parents can make when setting up a trust fund. As estate planning attorneys, we've seen first-hand how this critical error undermines so many parents' good intentions.
So, now you know that the Trust Maker holds the most power before the Trust is established, but the Trustee holds the most power after the Trust is established. And you also know that in many cases, during your lifetime you have both roles. So who has the most power in a trust? If you are creating it, YOU do.
The trustee is the person who controls property inside of the trust and handles investment of trust property. The trustee is responsible for carrying out the terms of the trust agreement.
Establishing and maintaining a trust can be complex and expensive. Trusts require legal expertise to draft, and ongoing management by a trustee may involve administrative fees. Additionally, some trusts require regular tax filings, adding to the overall cost.
Trustees generally do not have the power to change the beneficiary of a trust. The right to add and remove beneficiaries is a power reserved for the settlor of the trust; when the grantor dies, their trust will usually become irrevocable. In other words, their trust will not be able to be modified in any way.
From a legal standpoint, the trust itself is the official owner of any assets that have been retitled and transferred into it – not you as an individual.
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.
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.
A trustee of a trust is legally responsible to manage the trust in accordance with the terms of the trust document. A trustee can be an individual, a corporate trustee, or a combination of both.
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 revocable living trust is controlled by its creator or grantor while they are alive, allowing them to alter or cancel it at any time. Upon their death, however, the designated successor trustee takes over management of any property held within it according to its terms.
Once appointed, the Executor “runs” the estate much as a business person runs a business. The Executor makes sure all debts are paid, all taxes paid, all assets cared for, then distributes the remaining assets to the beneficiaries in accordance with law and the Will.
Trust checking accounts let trustees conduct transactions efficiently without needing outside funds while making it easy to track the financial activities related to the trust.
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.
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.
Trustee: Trustees often have more ongoing authority, especially in the case of living trusts or long-term trusts. They may manage and distribute assets over many years, depending on the terms of the trust.
For example, Gargiulo and Ertug (2006) identify what they call the 'dark side' of trust as occurring when the trustor strays beyond a critical threshold of confidence such that her trust in another becomes inappropriate and ill-judged.
An irrevocable trust could be a good option for people 65 and older who are Medicaid-eligible because it protects the elderly individual from having to dispose of their assets in order to qualify for Medicaid or nursing home care.
While some may hold millions of dollars, based on data from the Federal Reserve, the median size of a trust fund is around $285,000. That's certainly not “set for life” money, but it can play a large role in helping families of all means transfer and protect wealth.