Who Will Serve as Fiduciary? 

            Many modern estate plans incorporate the use of Revocable Trust Agreements and eventually leave assets for the benefit of loved ones (usually their children) in a trust, instead of outright.  The benefits of leaving assets in trust, instead of outright, are many and include:

(1) asset protection,

(2) estate tax avoidance, and

(3) control of assets. 

Accordingly, many modern plans leave assets in Trust.  When assets are left in trust, we need to determine who will serve as trustee.  The answer often depends on the goal trying to be accomplished.  If one is trying to protect a loved one from his or her own indiscretion such as wasteful spending and frivolous behavior, then you may want to name someone who is more responsible, or perhaps an Institution.  If you are trying to protect assets from equitable distribution in a divorce and generally to keep money in your blood family, it may be advisable to name an independent party, which could be a child’s best friend who would have absolute and pure discretion in making distributions of income or principal.  If the child or loved one who is beneficiary has the ability to fire the trustee for any reason so long as a new independent Trustee assumes the role, the asset protection purpose of the trust is best accomplished. 

There are many considerations in determining who shall serve as Trustee of a loved one’s inheritance that is left in trust for their benefit.  There is no simple answer.  It often comes down to a sibling, friend or professional advisor.   In any event, it is an issue that deserves careful consideration and the answer often depends on the goal to be accomplished.

Contributed by:

Mark F. Winn

Attorney at Law, PLLC