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.
Trustee Eligibility in California
This includes family members, close friends, professional advisors, financial institutions, and even corporate entities. It's crucial to choose someone who is trustworthy, competent, and capable of fulfilling the duties of a trustee.
The registration of a trust created under the decedent's will must include the name(s) of the grantor(s) of the trust, the name(s) of the trustee(s), show that the trust was created under the will, and that the grantor is deceased. For example “ Betty Brown Trustee Under the Will of Jason Brown Deceased.”
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.
The trustee is responsible for the trust and its assets. The trustee has broad powers to conduct the trust, and manage its assets. In a family trust, the trustees are usually Mum and Dad (or a company of which Mum and Dad are the shareholders and directors).
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) “Notice of Bankruptcy, 341(a) Meeting, Deadlines” – This notice is mailed by the clerk's office promptly after a bankruptcy case is filed. The notice will contain the name, address, and telephone number of the trustee.
A good trustee will be generous with their support and willingly offer their own skills, expertise and networks. Consider how you could draw on your professional, personal or previous volunteering experience to ensure different points of view and insights are included in discussions.
While in some situations it is appropriate for a sibling or other family member to serve as trustee, in many cases, particularly with a larger trust, naming a family member is not the best decision, for several reasons. First, clients fail to appreciate the amount of work involved in being a good trustee.
Typical choices are the grantor's spouse, sibling, child, or friend. Any of these may be an acceptable choice from a legal perspective, but may be a poor choice for other reasons. For example, some families would be torn apart if one sibling had to ask another for a distribution.
A bank can act as the Trustee of California's Trust and charge a fee for its corporate trustee services. When the grantor selects who will serve as Trustee of the Trust, they usually consider what fees may be involved and attempt to minimize them to the extent possible.
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.
Serving as an executor or trustee is a significant responsibility that requires careful consideration. While there are benefits, such as personal satisfaction and potential compensation, there are also drawbacks, including time commitment, emotional strain, and potential legal liability.
On the surface, it may seem like the best way to protect their legacy is to keep trust management within the family. However, this plan may backfire due to practicality or family dynamics. Appointing two or more siblings as co-trustees could create logistical problems.
The person you want to choose likely has firsthand knowledge of your values and may also know your beneficiaries' strengths and weaknesses. Their personal connection to you can help them carry out your wishes and give you peace of mind that someone you deeply trust is in charge.
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.
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. It's important to explore different scenarios before making a decision.
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.
Yes, a trustee can also be a beneficiary of the same trust that they manage. This situation is not uncommon, especially in family trusts. If a family member is assigned the management of the trust but you want them to benefit from its assets, this is a common arrangement.
Key Takeaways. Funds received from a trust are subject to different taxation rules than funds from ordinary investment accounts. Trust beneficiaries must pay taxes on income and other distributions from a trust. Trust beneficiaries don't have to pay taxes on principal from the trust's assets.
Disadvantages of Family Trusts
If you continue to treat the assets as your own, any trust could be open to challenge as a sham. Additional administration – If you establish a trust, you need to allow for the time and cost involved with meeting the trust's annual accounting and administrative requirements.
You'll need to draft a simple document that states who you are, the trust's info, the info for the new trustee, and that you are submitting an amendment to add this new person to the trust. This amendment document will need to be signed by both parties and notarized in order for it to be deemed official.
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.