And The One Thing You Should NEVER Do
One of the most important estate planning items on your checklist is choosing the right trustees to handle things if you become incapacitated or pass on. But how do you go about choosing them? Should you pick an attorney? Your children? Your best friend? I go through the basic decision-making framework as well as cover the one thing you should NEVER do.
First, we are talking about a Revocable Living Trust only. Who should be your trustee? The first person should be you. If it is a couple doing a joint trust it should be them. These are the active trustees at the very start. It’s the person(s) who is managing the revocable trust.
A Revocable living trust is great for avoiding probate when you pass on and also for laying out conditions for controlling your assets if you become incapacitated or even if you turn being the trustee over to someone when you’re old enough that you want to say, “I don’t want to manage my own finances, I’m going to leave it to this trustee.”
So if we are going to be technical, who is going to be your successor trustee? There is no one particular answer. It has to fit your particular situation. But I do provide guidance to my clients when we’re addressing this issue for their trust. This is exactly how I lay it out.
Let’s set up the scenario and answer the more simple question, who do you trust to handle financial things for you if you can’t? What if we put all of this stuff together, everything is in place and you drive out and BANG you are in a car accident and suddenly you’re in the hospital in a comma? Someone’s got to grab the checkbook and pay the bills, keeping everything going so when you do get home your not left with a house in foreclosure, utilities turned off or things being repossessed. Who do you trust so you are not left with a financial nightmare when you come home?
It’s a tough question, but if something does happen it would be your successor on your revocable living trust to step in and manage your assets. If you pass on, it is also that successor trustee who is managing your entire trust.
What are the big guidelines?
First, it has to be a person you trust. Even if you trust them as a person, do you trust their judgment particularly when it comes to things like finances? They can be the best friend in the world, but you aren’t going to turn over to them your money to manage because they just aren’t good with money at it. You just don’t trust the things they would try to invest in.
They should have some financial ability and know-how. I used to say they should be able to balance a checkbook. Apparently, that’s not a thing anymore. It’s that kind of baseline; they can work with numbers and finances a little bit. You don’t need someone who is a financial wizard. That’s not necessary when choosing a trustee, but they should be smart with money.
Listen to the entire video to find out all the things you need to look for in a trustee.