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.