If you are setting up a trust, your choice of who to make the trustee is one of the most important decisions. This article is part 1 of a two-part examination about the pros and cons of a family member as trustee. This will focus on the challenges. The circumstances vary widely for each family, so this article will review general ideas, but you should consult an experienced estate planning attorney, such as the Law Office of David Knecht, to discuss your specific family, circumstances and estate planning goals. This article will summarize information.
Challenges of Family Member Trustee
Fiduciary Duties.
The family member who serves as the trustee will have important responsibilities. The trustee is managing money for the benefit of someone else, so the law holds the trustee to a higher standard of conduct than someone who is managing their own assets. A fiduciary duty is the duty to act in the best interest and failure to meet those responsibilities can have consequences.
Inexperience.
Being a trustee can require financial and legal knowledge and expertise. It can involve managing investments, taking charge of business responsibilities, etc. Depending on the particular trust assets involved, the lack of experience of a family member can potentially be a challenge.
Potential personal bias.
Another challenge for a family member trustee can be a potential personal bias. The family member may have a lot of history, perhaps past conflicts, and personal relationships that may impact their ability to be objective and impartial. Even if the family member is completely objective, you may be subjecting that family member to criticism or conflict with other family members who might want a different result.
Contact an Experienced Estate Planning Firm
If you are considering setting up a trust with a family member as trustee, you may need advice about how to ameliorate the challenges described in this article. Regardless of your estate planning objectives, an experienced estate planning firm can help you analyze and evaluate your choices. At the Law Office of David Knecht, we want to help you achieve your estate planning goals. Contact us at 707-451-4502.
