When I speak with clients and ask them the question “who do you want to make decisions on your behalf should you become incapacitated, and who do you want making decisions when you are gone,” clients routinely have difficulty answering the question.
Many times, families believe that they should select their oldest adult child as the successor trustee. However, sometimes, families want all their children to be involved and select two and sometimes three children to be co-trustees. In addition, some families will select close friends or even neighbors to be the successor trustee.
Unfortunately, many times, families pick the wrong answer. As I have said many times before, being a successor trustee is not an honor, it is a job!
What Happens if my Kids aren’t Responsible?
I remember, many years ago, speaking with a client about this exact issue when they wanted to name their oldest adult son as successor trustee despite his credit problems, lawsuit problems, prior bankruptcy, and the fact that he was also going through a divorce. When selecting your successor trustee, it is important to select someone who is responsible, is organized, and will understand the level of responsibility and accountability involved in being a successor trustee.
However, sometimes, there is no good choice to name as a successor trustee. In these cases, a family may want to consider a corporate trustee. There are many instances where a corporate trustee may be preferable including:
- Assets are passing to children in trust due to irresponsibility or significant creditor concerns
- One of the children has special needs and there is no person selected to take care of the special need adult child
- There are charitable purposes with the planning, or the family has designed their plan for multiple generations
Although, selecting a corporate trustee does come with added costs, typically a corporate trustee will charge between 1% to 2.5% of assets annually.
For More Information
Make it a gift to your family by providing them with the protection that they deserve. Plan your estate today, so you can leave a lasting legacy tomorrow. If you have questions about estate planning or naming a trustee, please contact our office for a complimentary visit so that we can discuss your estate planning needs.