When doing your estate planning, it is imperative that you select the right trustee for your loved one’s spendthrift trust. Exactly who that individual might be depends on your particular circumstances.
However, there are a few common guidelines that can help you make the best choice possible for a trustee.
They are responsible and trustworthy
Any time you entrust a sum of money to someone, you want that person to make the right decisions. By choosing an individual with a sterling reputation whose ethics can’t be impugned, you are doing your due diligence to ensure the solvency of the fund after you have passed.
They have investment experience
Simply behaving above reproach in their financial dealings doesn’t mean that the trustee is well-equipped to manage the investment streams from the trust’s principal. Choosing a trustee without this level of experience could cause the funds to be depleted far too soon.
Why relatives are not ideal
You might figure that you trust an adult child or grandchild to manage the trust fund of another loved one who might lack the skillset to manage the principal of their own trust fund. Sadly, this can backfire on those funding the trusts.
Whenever money enters a relationship between two people, it changes the dynamic of the relationship. For instance, the recipient could attempt to pressure the trustee into agreeing to increase the frequency or amount of the disbursements.
Rather than risking disharmony among your family members, by choosing an unrelated financial professional to manage the trust fund you can preserve relationships among loved ones.