Many high-net-worth people rely on trusts to minimize taxes and keep wealth in the family. But who should serve as trustee? A survey by Spectrem Group shows many wealthy investors who create trusts designate themselves or a family member as the trustee. But are family members the best choice?
Trustees have many complex responsibilities. The primary obligation is to distribute assets and trust income according to the wishes of the grantor - the person who establishes the trust. But the job also involves keeping records, investing assets, filing tax returns, and resolving conflicts.
Among affluent investors, Spectrem reports, 41% serve as their own trustee, 40% name their spouse, 21% name another family member, and 18% name their child. Just 25% name a financial institution, while 24% name their attorney and 13% appoint their accountant. (The numbers add up to more than 100% because some grantors name more than one trustee, known as co-trustees.)
However, trust experts say family members often have problems trying to administer a trust. They may not understand legal and regulatory issues, and sometimes may grant distribution requests too freely, draining the assets.
An outside professional can provide the expertise needed, along with an objective viewpoint. Sometimes the best solution is to appoint a family member along with a trust expert as co-trustees. The professional ensures the trust is properly handled, while the family member may be in a better position to deal with family issues.
Here are four reasons to consider appointing a trust professional as trustee or co-trustee:
A corporate trustee brings objectivity and ensures that any conflicts or questions are resolved in a legally appropriate manner. In conclusion: There are numerous options at your disposal, so obtain expert advice.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
© 2024 Advisor Products Inc. All Rights Reserved.
Eagles' Club
Administration office:
120 Encino Avenue
Camarillo, CA. 93010
Los Angeles Office
10880 Wilshire Blvd. Suite 2222
L.A, CA. 90024
Fax: 818-992-9997
Toll Free: 866-900-AIDA
aida.eaglesclub@adviserfocus.com
Mutual of Omaha Investor Services, Inc. and its representatives do not provide tax or legal advice. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current regulations and is not exhaustive. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan.
Securities offered through Mutual of Omaha Investor Services, Inc. a Registered Broker/Dealer. Member FINRA/SIPC. Advisory services offered through Mutual of Omaha Investor Services, Inc., a SEC Registered Investment Advisory Firm. Eagles' Club and Mutual of Omaha Investor Services, Inc are not affiliated.
Securities, Insurance and Advisory licensed in State of California. California Department of Insurance License Number 0660322. Also Insurance licensed in Kentucky.