by Amy F. Sahler, Director of Fiduciary Services
One of the most important decisions in creating an estate plan is choosing a trustee – either an independent professional or an individual to perform the critical role of managing your trust assets and implementing your wishes. A trustee should have your best interests at heart and the experience to carry out the goals and objectives set forth in your trust.
Typically, trustees are divided into two categories:
- Independent professional trustees – a professional trustee such as Boston Fiduciary Services, LLC, an independent trust company, or a bank trust department.
- Individual trustees – loved ones such as a spouse, relative, or close friend, and trusted advisors, i.e. a financial advisor, attorney or accountant.
Each choice has certain advantages, however the common characteristics all trustees should posses include good judgement, integrity, and professional competence.
Fiduciary duty, legal authority, responsible management of trust assets, and trustworthiness are cornerstones required of a trustee. Selecting a trustee with specialized knowledge and experience is essential for the proper execution of your estate plan and to the preservation and transition of wealth from one generation to the next, due to the often complex nature of acting in this capacity.
The merits of an individual trustee or trusted advisor stem from that person’s intimate knowledge of your family, and a friend or family member may charge little or no fee. Unfortunately, he or she may not be capable of competently managing and monitoring the investment of trust assets or administering the trust. A financial advisor, attorney or accountant may also have substantial knowledge about you, your beneficiaries and your goals and objectives, but not the legal and financial experience necessary to fulfill the role of trustee. If selecting a spouse, relative or close friend as a trustee, a significant burden may be placed on that person due to the time demands required to perform the duties, particularly if the beneficiaries may be contentious. Retirement, a serious illness or death of an individual trustee often requires a successor trustee, a situation which is avoided with an independent professional trustee.
Independent professional trustees provide the strength or resources and expertise to ensure that trust assets are invested wisely, and provide the following benefits:
- Experience and knowledge – based on years of specializing in trust administration and other fiduciary duties.
- Impartiality and objectivity – dedicated to discharging the terms of a trust by making decisions that are both impartial and objective.
- Continuity and permanence – the ability to serve you and your beneficiaries across multiple generations over the long-term.
The role of a trustee may bring complexity and potential liability and, therefore, both factors need to be weighed when selecting a trustee. A qualified trustee will have specialized knowledge, experience and the time to efficiently and professionally manage your trust.
Often the most practical and satisfying solution is to appoint co-trustees, one being an individual who knows you, your family, and your values, and the other being an independent professional trustee that provides financial expertise and the knowledge to properly administer your trust assets.
Selecting a trustee requires careful thought and consideration. Boston Fiduciary Services, LLC, a wholly owned subsidiary or Boston Financial Management, Inc. serves a a professional independent trustee, often with a family member or other individual. We would welcome the opportunity to speak with you about the benefits of naming an independent professional trustee.
To learn more, please call Amy F. Sahler, Director of Fiduciary Services, at 617-338-8108.
Important: This article does not contain any legal or tax advice. You should always consult with your attorney, accountant or other professional advisors before changing or implementing any tax, investment or estate planning strategy.