Who Should Serve as a Trustee?

Whether you choose to go with an irrevocable trust or a revocable trust, it’s important to think about the person who will be installed in the role of trustee. One of the most key differences between irrevocable and revocable trusts is who acts as successor trustee or trustee.

When spouses choose to form a revocable trust together, they will often act as successor trustee for the other in the event that this becomes necessary. If you are using an irrevocable trust, it does not make sense to name yourself as the trustee if your primary goal of establishing such a trust is to protect your assets from creditors.

State laws are usually not as important when it comes to who can be named as a trustee or successor trustee but the terms of the trust will determine what the trustee can or cannot do. Certain qualities need to be considered when selecting the right person to be appointed as a trustee or successor trustee. Some of the qualities to keep in mind include:

  • The party must understand how to legally transfer any trust assets to beneficiaries when the time comes.
  • They must be able to deal and communicate with these beneficiaries on a regular basis.
  • They should be someone you trust to manage your investments properly.
  • They should be someone who can understand some of the complex financial transactions that they might be required to undertake as a trustee.

If you do not have someone in your life who is comfortable serving in this role or you do not feel confident in their ability to serve in this role, you may choose to use a corporate trustee instead. Naming certain family members to this role is not always the right solution to everyone, particularly if you are naming one sibling over another. Schedule a consultation with a dedicated estate planning lawyer to talk more about your options.


Do You Know These Three Trust Parties?

The establishment of a trust is usually a more advanced form of an estate plan and it requires at least three parties, some of who may be served by the same person. The first party to a trust is the person who creates it known as the creator, settlor or grantor. The second party to the agreement is the trustee. This is a person who has legal title to the property and the trust and manages the property according to the terms inside the trust agreement as well as applicable state laws.

In many cases, when the title to the property must be recorded, it is listed as in the trustee’s name not as an individual person but rather as the person trustee of the X family trust. The third party to a trust document and strategy is the beneficiary. This is the person who benefits from the trust and multiple beneficiaries can be on a trust at the same time.

There can also be different beneficiaries over time. Sometimes an individual might be known as an income beneficiary, meaning that they earn interest and dividends in income on the trust. Other beneficiaries can be remainder beneficiaries, which means they will get what is inside the trust after previous beneficiaries pass away or those rights expire.   

Creating a trust can be a key aspect of your estate planning, but it only makes sense when you have worked directly with an estate planning lawyer to select the right kind of trust. Given that you can accomplish many different goals with a trust, you want to choose the right one and fund it properly to get all the benefits.

Understanding the Power of Appointment in Trusts

Many people who approach their estate planning attorney about putting together a trust have a goal of establishing the trust for the beneficiary’s lifetime, while also allowing for discretionary distributions to a beneficiary in the event that the beneficiary might have a reason or need to access those trust funds. Many of these trusts often are created with default provisions designed by the client, which allow for the disposition of remaining trust funds at the beneficiary’s death.

However, the creator of the trust does not have the ability to see into the future, meaning that the default provisions for a trust remainder often become undesirable over the course of time. This is where the use of a tool known as a power of appointment can become meaningful. This is a good way to add flexibility to trusts to account for future situation changes.

This allows the initial beneficiary to adjust default remainder provisions after the creator’s death. Schedule a consultation with a trust planning attorney today to learn more.       

Choosing a trustee is an important process, and it’s not just about who you’d like to serve in that role. It’s also about who wants to serve in that role and their comfort level with taking on that level of responsibility. Since a trustee has a high level of fiduciary duty, too, this needs to be a level of comfort on their end in terms of taking care of all the details. What you don’t want is someone unfamiliar with the process who is not sure about all the details who then becomes overwhelmed in handling all of the tasks of a trustee.

For more support with trustee issues, consider partnering with a trusted estate planning lawyer to draft and fund your trust.


How Important Is It If Your Estate Planning Be Followed to the Letter?

Do you have specific wishes or rules you’d like to place about inherited wealth? An independent and professional trustee might be the right choice as you select and fund your trust. trustee-lawyer-NJ

A professional trustee who is familiar with all of the requirements of him or her can deliver consistent, unbiased and prudent administration of trust assets across multiple generations. An independent professional trustee is far more likely to respect and apply strict application of your trust terms.

There are many different reasons for this but a professional trustee will have internal and external audits and management oversight and written policies and procedures to guide his or her performance in this role. All too often, professional trustees are only sought out after a family has self-destructed due to a previous trustee who didn’t work out.

While a professional trustee might not be able to help to prevent all possible disagreements, the probability of family conflict and problems between beneficiaries and trustees can be dramatically reduced by selecting an independent trustee. The professional trustee must be engaged and have the capacity to work closely with the family to fulfill the many duties and respect the terms of the trust.


Do I Really Need an Independent Professional Trustee?

So you’ve already made the decision to use a trust as an estate planning strategy to shield assets from potential creditors or predators, to add a layer of privacy to the management of your estate plan and to exercise some level of control over how assets in your estate are passed on. estate-planning-NJ

This is an important first step in the process but you might also need to give a careful evaluation to who you choose to serve as the trustee. While a family member might have the necessary skills to step into this role, a family member is not always the right choice.

Typically speaking, an independent professional trustee is much likely to follow the terms of your trust to the letter. This is because they will have internal and external audits, management oversight and written procedures and policies outlined by you. Professional trustees also have tended to serve in these roles before and are familiar with what is required of them as well as the lines they cannot cross in performing their role.

An independent professional trustee can minimize the possibility for conflict when they are not immediately related to anyone who is receiving benefits or assets inside the trust. A professional trustee will also understand that any monies left inside the trust do not belong to the trustee and should be comfortable in working in a close capacity with your loved ones to manage the disbursements of funds and handle communication professionally.


Avoiding Trustee Issues

An uncooperative trustee named as responsible for your trust management could prove especially problematic for your loved ones but only after the fact when you are no longer around to change this person or to do anything about it. NJ-estate-planner

An uncooperative trustee is someone who is not living up to his or her legal obligation to keep heirs informed about the status of an estate or to distribute the assets in a timely fashion after the estate has been concluded. Beneficiaries are entitled to certain things when named in a trust. For example, a beneficiary is entitled to a copy of a trust.

While the trustee who is responsible for the management of this asset can choose to limit what is ultimately sent to you with regard to only sending you provisions that apply directly to you, you may have rights to pursue legal action if the trustee refuses to send you anything at all. As a beneficiary, it’s a good idea to ask for a copy of this document anyways to review the terms. Many of the problems that result between beneficiaries and allegedly uncooperative trustees stem from misunderstandings and miscommunications.

Either one of these individuals or both might be confused about what is actually included inside the trust. Just because someone told you about the provisions inside doesn’t necessarily mean that you understand the terms and it’s a far better idea to ask for a copy and to review it. If you review the trust and determine that the trustee who has been appointed is not living up to his or her fiduciary duty or legal responsibilities, you do have options to pursue legal action against this person.

The first line of resolution to pursue is to consider contacting the trustee directly and explaining your concerns. While this can be a difficult conversation, many further legal issues can be avoided by requesting this conversation directly with a trustee. You may be able to sort these issues out without having to go to litigation. If you come to the conclusion that this was the result of a misunderstanding, you may be able to avoid taking further legal action, but in the event that you must pursue litigation, schedule a consultation with a knowledgeable probate attorney.


Robin Williams’ Trusts Call for Conversation About Trust Privacy

The loss of Robin Williams last week certainly sent ripples across the country, but it also highlights an important topic for your estate plans: privacy. Within a matter of hours after news outlets started reporting his death, details about the trusts documents he had established for his three children started emerging as well. The prime sources for these details? Gossip websites and tabloid. One site even published a 35-page document detailing Williams’ irrevocable trusts established for his children.

Shortly after these documents, one of which dated back to 1989, hit the media, Williams’ publicist responded that neither of them were accurate with regards to the former actor’s current estate plan. What’s most disturbing, however, is that trusts are most often used instead of wills because of the veil of privacy they offer.

So how did Williams’ documents, albeit outdated, end up in the public eye? The trustee of both the trusts had requested a co-trustee successor be appointed back in 2008, when the originally designated individual passed away. All of the public sharing of the trust document could easily have been avoided simply using trust protectors, like an accountant, trusted friend, or attorney who retains the power to appoint or remove trustees. To learn more about ensuring that your trusts are protected privately, contact our offices at info@lawesq.net or via phone at 732-521-9455 to get started.

Robin Williams’ Trusts Call for Conversation About Trust Privacy










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Tips for Choosing a Trustee

Don’t overlook the importance of selecting a proper trustee for your estate planning. Regardless of the type of trust you are planning to use, you need to ensure that you have selected an appropriate individual. In many cases, trustees have a great deal of power and authority and it is not a decision you should take lightly as a business owner or individual.

Tips for Choosing a Trustee
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The gut reaction for many people is to select a child as the trustee. There can be negative ramifications of doing this by dividing the family in the future or by giving authority to someone who hasn’t received the proper advice and education about it. Instead, you may want to give some thought to using a professional individual. Attorneys and accountants, for example, can serve as trustees. They are more likely to understand their responsibilities and bring unique experience to table, but it can be expensive. There are, however, many situations where asking a professional to take control simply makes sense.

As an estate planning client, you should be aware that you can give out powers for beneficiaries to revoke trustee powers and replace him or her. If the trustee is overbearingly restrictive on distributions, for example, the beneficiaries have some options. If there’s no removal power outlined in the trust and the trustee won’t step down, they may be headed to court. As the creator of the trust, you can even outline how often the beneficiaries can exert this power so that it’s not abused. To learn more about trust development and execution, email us at info@lawesq.net or contact us via phone at 732-521-9455.

Florida Court Ruling Provides Guidance For Those Using Trust For Asset Protection

A recent appellate court ruling in Florida gives former spouses the legal grounds to take funds from a type of trust that was thought to be unavailable to them.

State flag of Florida
State flag of Florida (Photo credit: Wikipedia)

Discretionary trusts are set up by the wealthy to give a trustee the authority to make or not make distributions from the trust. But the ruling late last year in Florida gives ex-spouses and the children of beneficiaries more leeway to gain access to those funds in certain circumstances.

However, estate planning experts are divided over whether this ruling establishes a precedent for other states, according to an article on fa-mag.com.

In this case, Bruce Berlinger challenged a lower court ruling that allowed his ex-wife, Roberta Casselberry, to obtain funds from a discretionary trust fund after he stopped paying her $16,000 a month alimony. The trust had been paying the money directly to her and not to him.

Usually, a creditor may not garnish funds in a discretionary trust if the trustee does not make the distributions to the beneficiary. In this case, the court ruling the ex-spouse was deemed to be an “exception creditor “and could seek distributions from the trust to satisfy her alimony requirements.

About 30 states have some form of “exception creditor” provision in their trust codes.

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When You Lose Trust in the Trustee: How A Beneficiary Can Enforce A Trust

As a recent article explains, sometimes trustees do not do what they are supposed to. Sometimes trustees make mistakes in carrying out their duties while other times, they knowingly fail to comply with the terms of the trust. If you are the beneficiary of a trust, there may be some things you can do to ensure that the trustee follows the terms of the trust.

Because a trust is created by a legal document, each trust contains rights and duties that are legally enforceable. If a trustee has not followed the terms of the trust, he or she is considered to be in breach of his or her duties. There are several steps a beneficiary should take when he or she believes that the trustee of his or her trust is in breach.

The first step that a beneficiary should take is to review the trust documents. The beneficiary should be certain of what the terms of the trust are before he or she confronts the trustee concerning an alleged breach. Often, discrepancies over the behavior of a trustee are based on misunderstandings about what the trust documents actually say.

If you have consulted the trust documents and still believe that your trustee is in breach of his or her duties, speak with the trustee first. A majority of trust issues can be resolved through proper communication. If communication does not solve your problem, review the trust document to determine what the procedure for replacing trustees is. Although each trust is different, many trusts contain a provision that allows for the relatively easy replacement of a trustee.