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Choosing between an Individual and Corporate/Professional Trustee

Trusts

Putting together a trust is a beneficial feature for many estate plans. Trusts, depending upon the type, can shield assets from creditors’ claims, and will allow the creator to control how his/her assets are treated after death. Working and sacrificing to amass property to pass onto loved ones is a goal for many individuals in this country, and wanting to do everything possible to see their assets preserved and continued for generations to come represents some of the principal reasons trusts are created. Trusts are structured to place the assets outside the hands of the creator and into the management and direction of a trustee, and for the benefit of designated beneficiaries. In other words, the creator, once property is transferred into the trust (though, the time is later for revocable trusts), cedes any control or power over the asset to the trustee. Thus, picking the right person or entity to fill this role is one of the most important decisions a person makes when establishing and reviewing a trust. There are two basic types of trustees – individuals or corporate/professional trustees (typically, banks and other financial institutions), and each brings its own set of benefits and drawbacks. However, the responsibility of this role in managing, distributing income and assets, and settling a person’s affairs is at the highest level, and understanding the pros and cons of choosing an individual versus a professional trustee to take on this role is an important part of the estate planning process.

Individual Trustee

Individual trustees are usually well-known to the trust creator, often being close family or friends, and as a result, are in a better position to know what the creator would want and the needs of the beneficiaries. Further, the fees for an individual trustee would be lower compared with a professional appointee, and some will even waive the fee to keep a greater percentage of the trust intact. On the other hand, finding a person who is responsible and knowledgeable enough to handle the duties and power of this position may be difficult, especially given the numerous requirements and technical rules that control how trustees must operate. In addition, appointing a family member or other individual with a close, personal connection can lead to disagreement, family divisions, and perhaps, litigation. Consequently, the dynamics of the family, and the qualifications and personality of the individual chosen for this position should be a major consideration.

Professional Trustee

Professional, or corporate, trustees, as the name implies, are banks and other financial institutions that have entire departments dedicated to this work. Thus, they are well-versed in State law and have more knowledge about the financial markets. They are also familiar with how to follow and administer the terms of the trust, as well as potential legal and compliance that may be of concern. Additionally, professional trustees are permanent, i.e., death is not an issue, and they have permanent locations, which is important for finding the most favorable location for tax savings. However, the fees for professional trustees are considerably higher, and they may not be as accessible as an individual trustee because any trust will be one among many others. For trusts with considerable or a complicated of variety of assets, a professional trustee may be the better route because of the expertise they have with financial instruments and asset management.

Speak to a Florida Estate Planning Attorney

Trusts offer many benefits in terms of asset protection and estate planning, but really only function as well as the trustee appointed to manage the property. Picking the right trustee is key, and William Rambaum can help you find the choice that will best suit your needs and your family’s future. Trustee selection is not a small thing, and an experienced attorney should be consulted about the option that is best for your situation. Contact the Oldsmar estate planning law firm today at (727) 781-5357 to schedule an appointment.

Resource:

americanbar.org/content/dam/aba/migrated/publiced/practical/books/wills/chapter_10.authcheckdam.pdf

https://www.rambaumlaw.com/florida-estate-plans-when-you-own-out-of-state-property/

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