Estate planning is a deeply personal process where we decide who will make decisions for us, take care of our affairs and take care of our kids. And, it can lead us to select friends or family members to act as trustees. However, this is rarely the right move.
Not usually appropriate for a friend or family member
A trustee is a job. It is a highly technical position that has potential legal and financial liability and legal and financial responsibilities that can last for decades (or longer). This means that a trustee requires specialized knowledge to effectively, appropriately and successfully conduct their duties. This is why it is usually advisable for estate planners to use a third-party trustee or trustee service.
Especially when looking at Kent, Washington, professional trustee services, the first consideration is cost. If the service costs too much, it can liquidate the trust. When comparing the costs, compare the comprehensive fees, which is the cumulative fee that represents the fee for all of the services the trustee offers (tax, brokerage services, etc.).
Make sure that the trustee or trustee service has experience in whatever your trust is looking to do. For example, if your trust will withhold money for the benefit of your family, the trustee should have experience with this kind of spendthrift beneficiary relationship. For example, withholding money from a drug addict beneficiary to get them into a Kent, Washington, rehabilitation facility.
Legal, recordkeeping and reporting
Depending on the type of trust, there are likely IRS, state and federal requirements to maintain the unique legal status of the trust. This includes legal, recordkeeping and reporting requirements. Make sure the trust understands this and has the capacity to maintain the trust’s status at all levels of government.
Protection and insurance
There is also potential liability to the trustee for decisions they make (legal, broker, tax, etc.). This could cause Kent, Washington, litigation and losses, and you need to make sure that the trustee can take these losses without going bankrupt. Your estate plan is unique to you and if you need assistance with any aspect of planning or implementing an estate plan, a local attorney can be an advocate and guide for your planning.