As a firm dedicated to providing an integrated wealth management experience, we help our clients effectively maximize their assets and unlock opportunities to realize their personal and financial goals. An important aspect of this comprehensive approach is advising clients on the intricacies of their estate plan.
One of the most consequential decisions in estate planning is who to name as trustee. The trustee’s knowledge, commitment, ability, and skill will have an enormous impact on fulfilling the intended purpose of a trust. Despite the importance of this decision, it is often given less consideration than the structure of a plan or choice of attorney.
Whether you choose a friend, family member, or professional corporate trustee, the roles and responsibilities of a trustee are the same. Not everyone is aware of the extent and importance of the job, and understanding the responsibilities are a significant part of the decision-making process.
What Does a Trustee Do?
The trustee’s role is complex, and includes, among many other administrative tasks, the following duties and responsibilities:
- Reading and understanding the trust document;
- Inventorying and valuing assets;
- Communicating with the beneficiaries;
- Investing trust funds prudently, as defined by state law and fiduciary principles;
- Accounting for principal and income debits and credits;
- Making discretionary distributions;
- Preparing, executing, and filing tax returns;
- Managing unique, non-marketable assets;
- Complying with fiduciary duties, including the duty of loyalty, the duty of impartiality, the duty to inform beneficiaries, etc.; and
- Interpreting complex documents.
Who Can Act as Trustee?
A wide array of people and institutions can act as a trustee, including individuals, such as a spouse, child, or friend; professionals such as attorneys, CPAs, or a professional fiduciary; a corporate trustee; or combination of the above.
You may consider it honorable to ask an individual to serve as trustee, or feel it is an honor to be asked to serve as the trustee, but most individuals are unaware of the requirements and the time-consuming, complex matters they will need to address during an emotional time.
For the interest of all parties, consider any unusual circumstances or extraordinary duties that may be involved with trust administration and ask yourself:
- Is my selected trustee the best choice for the role?
- Is the selected trustee willing/able to serve in such capacity?
- Is there a clear understanding of the commitment, responsibilities, and potential pitfalls?
- Do the family members all get along?
- Do I have a successor trustee in place in the event an individual trustee is not willing/able to serve?
At Carlson Capital Management, we are privileged to help our clients navigate this space and recommend an approach to selecting a trustee that will allow you to best realize the potential of your wealth. Please contact your advisor if you’d like to discuss the selection of a trustee in more detail.
Did You Know?
Carlson Capital Management has a team of professionals with deep estate planning experience who work alongside all of the CCM advisors to ensure
our approach to wealth management is optimized to help clients reach their goals at the end of their lives. Included in this team:
- Dan Edwards, CPA, Director of Estate Planning
- Callie Geist, CFP®, J.D., MBA, Integrated Wealth Advisor
- Kevin Koski, CPA, Principal Tax Advisor
- Matt Morehead, J.D., CEBS, Senior Integrated Wealth Advisor
NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional advisor familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.