Last night I attended a seminar on the Selection of Fiduciaries & Advisors. I thought it would be informative to share the important highlights of this meeting over the next few days. Your fiduciaries & advisors generally fall into 3 major categories. They can be individual family members or friends, professional advisors or corporate/institutional advisors.
Today my discussion will center on the selection of family members or close friends as trustees. Any one who serves as a trustee does so in a fiduciary capacity which means the role is govern under the laws pertaining to fiduciaries. What are the pros and cons of selecting family members or close friends as trustees?
PROS:
(1) Generally the fee for the service is nominal or none. Family members are often times beneficiaries under the trust and so therefore would not also charge a fee for managing the trust. Family friends agree to serve to be of assistance and may only expect to get reimburse for expenses incurred on behalf of the trust.
(2) Family members and friends know the beneficiaries and understand the needs. They understand the dynamics of the family relationship and the intent/desire of the person creating the trust.
(3) Knowledge of the trustworthiness of family members or friends is known through experience. The person creating the trust will choose family members or friends who have already proven their loyalty and trustworthiness.
CONS:
(1) Family members or close friends probably will not be familiar with the laws applicable to Trust or Fiduciaries. They are govern by these laws and must become familiar with them so that they are not in violation and subject to fines and penalties.
(2) Sometimes the closeness to the beneficiaries can cause a conflict and make it difficult for the trustee to make the tough/unpopular decisions.
(3) What if the trustee were to become incapacitated or die? This is always a potential issue for longer term trusts with individuals as trustees.
Understanding the pros and cons will help you decide how you might want to proceed with appointing individual trustees. Tomorrow, I will discuss having professional advisors as trustees. Leave your questions or comments here or contact us at http://www.ythlaw.com/
Today my discussion will center on the selection of family members or close friends as trustees. Any one who serves as a trustee does so in a fiduciary capacity which means the role is govern under the laws pertaining to fiduciaries. What are the pros and cons of selecting family members or close friends as trustees?
PROS:
(1) Generally the fee for the service is nominal or none. Family members are often times beneficiaries under the trust and so therefore would not also charge a fee for managing the trust. Family friends agree to serve to be of assistance and may only expect to get reimburse for expenses incurred on behalf of the trust.
(2) Family members and friends know the beneficiaries and understand the needs. They understand the dynamics of the family relationship and the intent/desire of the person creating the trust.
(3) Knowledge of the trustworthiness of family members or friends is known through experience. The person creating the trust will choose family members or friends who have already proven their loyalty and trustworthiness.
CONS:
(1) Family members or close friends probably will not be familiar with the laws applicable to Trust or Fiduciaries. They are govern by these laws and must become familiar with them so that they are not in violation and subject to fines and penalties.
(2) Sometimes the closeness to the beneficiaries can cause a conflict and make it difficult for the trustee to make the tough/unpopular decisions.
(3) What if the trustee were to become incapacitated or die? This is always a potential issue for longer term trusts with individuals as trustees.
Understanding the pros and cons will help you decide how you might want to proceed with appointing individual trustees. Tomorrow, I will discuss having professional advisors as trustees. Leave your questions or comments here or contact us at http://www.ythlaw.com/
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