by Tom McGirr
Living trusts are rapidly replacing wills as the primary estate-planning document. Unfortunately, this transition is not without cost. Trust litigation is one of the fastest growing areas in the legal profession with almost all of the lawsuits involving family members suing other family members. Even if there isn’t litigation, folks find the role of trustee much more challenging than they anticipated.
Parents often name a child or other family member to serve as their successor trustee, believing that the only thing the trustee will have to do is pay final expenses upon death and distribute the assets. Even this limited role often results in family conflicts. However, these conflicts are only exacerbated should the parent suffers a stroke, Alzheimer’s, or some other devastating event that leaves them alive but incapacitated for a lengthy period of time. In that event, the family member will have to assume responsibility for the ongoing management of their assets for an extended period of time, perhaps several years. Is a family member the right person to assume this responsibility? Below we take a look at several of the most important things to consider before selecting a trustee:
Choosing a Trustee
1) Availability: Will your trustee have the time and flexibility to drop everything and dedicate days or weeks at a time caring for you and your estate assets? It can be very time intensive to manage or sell an operating business, oversee the investment portfolio or real estate holdings and develop and monitor an ongoing in-home healthcare plan should you be incapacitated. It may be difficult to perform these duties especially if the trustee lives out of the area, has a full-time job, and an active family.
2) Investment Expertise: Does your trustee have the experience to manage your investments for you, over the course of your lifetime, should you become incapacitated? Your living expenses are likely to rise. If your family member makes a mistake, it could adversely impact your future quality of life.
3) Record Keeping, Accounting and Communication: The trustee has a duty to keep the beneficiaries informed by means of providing regular accountings and other means of communication. Unfortunately, this is an area that often causes tension among family members. Even when the family member is doing everything right, their decisions can be questioned or challenged by other family members concerned about their ‘future inheritance.’ The trustee may feel they are being personally attacked, leading them to become defensive and less communicative. Family relations can become strained to the point that litigation results. At that point, any hope that the family will continue to gather for Thanksgiving dinner is probably unrealistic.
4) Sensitivity and Impartiality: Does the trustee have the ability to say “yes” and “no” to all the beneficiaries requests for assistance without playing favorites? Do they have the ability to put themselves in the beneficiary’s shoes and view the world from their perspective when considering the requests? Are there any past sibling rivalries that might reignite? Will serving as trustee put unrealistic strains on family relations?
5) Cost: What will the trustee charge for their services? How much will they be able to do on their own and how much of the work will need to be referred to specialists at extra cost? How often will the trustee need to seek the guidance of the trust attorney to perform their duties?
Using an independent third-party corporate trustee, such as Columbia Bank Trust and Investment Services, may be a better option for you. Our trust teams, located in Oregon, Washington and Idaho have the capacity and expertise to quickly respond to most any situation. We have a proven track record in managing traditional portfolios, real estate and business succession planning. Our trust officers understand the importance of good communication, sensitivity and compassion during what can be a stressful time. As professional trustees, we know what to do and when to do it, thereby reducing the need to hire outside advisors. Most importantly, we offer a way to preserve family harmony during a very difficult time.
We welcome the opportunity to discuss how we might be of service to you and your family. Contact your local Columbia Bank and ask to see a trust representative.
Submitted by Thomas H. McGirr, JD, CTFA
Senior Vice President and Market Manager
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