THE PLAIN ENGLISH ATTORNEY

Trustees List

One of the most important decisions you can make in the estate planning process is choosing a list of trustees who will pick up the financial ball if you become incapacitated and who will manage your final affairs and distribute inheritances if you pass on. In fact, it is the first of what I call “The Big Four Questions” of estate planning. Things do not just automatically happen during an incapacity or after death; someone needs to be in charge to make those things happen. (If you want the quick, one-page synopsis of this topic, check out the free Trustee Cheat Sheet and Checklist download at https://www.plainenglishattorney.com/pl/2147653836).

I once went through this topic with a client who was just refusing to name people to handle financial decisions (and it turned out that he didn’t have anyone that he truly trusted). “Does Donald Trump have to name someone to do things for him?” he asked (and this was long before Trump ran for President.) “Trump says he wants a ham sandwich and Trump gets a ham sandwich.”

“Who does he say it to?” I asked him. “I don’t care how rich or important Donald Trump is, if he is standing in the middle of an empty room screaming at the top of his lungs that he wants a ham sandwich, it doesn’t just magically appear. He has to tell someone to get him a ham sandwich. If you want your estate to be managed according to your wishes, then you need to have someone to carry out those wishes.”

When choosing a list of trustees, usually for a revocable living trust plan, there should be at least three successor trustees named in succession. So what is the criteria for choosing good trustees for your estate plan?

Another factor that sometimes comes into play when naming successor trustees is when a person runs out of people they trust. In addition, we sometimes create generations trusts where the assets will be protected across multiple generations, so whomever is named as trustee is not statistically likely to be alive when the trust is finally closed out. What do they do then? What options are there? This is where a professional trustee should be considered, even if it is only a backup to the people you are naming. When that happens, there is an order of recommendations for the type of professionals to consider:

A Trust Company

Trust companies are just professional fiduciary trustees. Handling the tasks of investing, determining the needs of the beneficiaries, and using the trust funds appropriately and according to the terms of the trust is what they do.

Bank Trust Departments

Coming in a distant second are bank trust departments. While there are certainly exceptions, a lot of banks still have the reputation of liquidating everything, investing in bank CDs in their own bank (of course), and being stingy with distributing funds unless specifically called for in the trust instrument. The rationale for putting the money in their own bank CDs is they are “safe” investments because, obviously, they know their bank is safe. However, it can be argued that banks will put everything into their own bank CDs in order to bolster their own balance sheet.

Attorneys and Accountants

While skill in being a trustee can vary greatly among these professionals, they often charge their usual hourly rate to work as a trustee, and this can become expensive. In my own experience, there is nothing an attorney or accountant can do better or more efficiently than a trust company and there is a big risk it could become much more expensive.

As I have mentioned in past content, it is the goal of my law firm to provide good, solid estate and Medicaid planning information to the public. Part of that is accomplished through our law office website, these blogs, videos on the YouTube channel, and now in one-page downloads, including the Trustee Cheat Sheet and Checklist. If you are on your estate planning journey, then please check out these resources so you can make good decisions, and if you wish to set up an appointment, then please let us know by calling us at 919-844-7993.

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