The Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307
After your loved one passes away, you may discover that you have been appointed a trustee of his or her trust. This means that you are tasked with the responsibility of administering the trust. In some cases, you may also have the authority to appoint a co-trustee to ease some of the burden. Trustees who have this option may wish to consider choosing a professional trustee, typically a bank or trust company, to serve as co-trustee.
6 Reasons to Consider Appointing a Professional Trustee to Serve Alongside You
If you can, you should consider naming a professional trustee to serve with you for the following reasons:
- Having a bank or trust company as your co-trustee will bring professional management services to the table. Unlike the average individual trustee, a bank has an entire department of people able to assist with administration. The people who make up these departments are experienced professionals with knowledge of the requirements and appropriate procedures relating to trust administration.
- Using a professional trustee can take the burden of investing trust assets, tax matters, and understanding the laws as they relate to trusts off your shoulders. Investing trust assets is not a simple matter, and trustees have a duty to use care when handling the trust funds. A professional trustee knows how to invest the assets of the trust in a way that protects the interests of the beneficiaries. In addition, the taxes and laws relating to trusts are complex and often highly technical. The average person does not have a background handling these matters, while a professional trustee does.
- A professional trustee can provide continuity with regard to trust administration. Some trusts can take years, if not decades, to fully administer. There are likely to be times when you may be unavailable or otherwise unable to carry out all of your duties. Appointing a bank or trust company as a co-trustee ensures that someone will always be available to administer the trust.
- Using a professional trustee can provide some objectivity. Many times during the trust administration process you may find yourself having to exercise some level of discretion. For example, you may have the ability to make distributions to beneficiaries for their health, education, maintenance, or support. A professional trustee may have a more objective view when making these decisions than you may have if you have personal ties to the beneficiaries.
- If a bank or trust company serves as your co-trustee, it may help avoid any potential conflict of interest. For example, you, or someone you love, may be one of the beneficiaries of the trust. Clearly, if you are called upon to make decisions about distributions, it may appear that you have a conflict of interest. In these cases, the bank or trust company can make the call instead to avoid any appearance of impropriety.
- Having a co-trustee that is a trust company or bank can make it less likely that you will be accused of misappropriation of trust funds or some other violation of your trustee duties. Unfortunately, even when you are doing the best possible job serving as a trustee, some unhappy beneficiaries may try to accuse you of wrongdoing. If you have a co-trustee that is a professional, it may be less likely that disgruntled beneficiaries will make accusations as to how you have carried out your duties. Multiple trustees often serve as a form of “check and balance” system to reduce the likelihood that wrongdoing may occur. Further, since your co-trustee is a professional, it is even less likely that wrongdoing would be able to take place without a co-trustee putting a stop to it.
Before you take any action during a trust administration, it is important to seek legal guidance in order to ensure that you are carrying out your responsibilities appropriately. We encourage you to contact us today at (888) 443-6590 to learn more. Or, fill out our quick and easy contact form to allow us to further assist you.