When setting up a trust, one of the most significant decisions you will make is choosing the right trustee. This person will manage your trust’s assets according to your wishes. Often, people choose a close family member for this role due to their personal connection and deep understanding of the family’s needs and best interests. However, it is also critical to consider both the advantages and disadvantages of this decision.
Pros of choosing a family member as trustee
- Trust and personal connection: Having a family member manage your trust can add a personal touch to the handling of your assets. Knowing that someone close to you is in charge of your assets may give you confidence and peace of mind.
- Cost-effectiveness: Usually, a family member will manage a trust without expecting compensation. This significantly lowers the overall cost of maintaining the trust compared to hiring a professional like a bank or a trust company.
Cons of choosing a family member as trustee
- Potential for conflict: Mixing personal relationships and financial responsibilities typically results in conflicts and disputes. If the trustee must make a decision that favors one relative over another, tension can arise.
- Lack of expertise: Managing a trust requires specific financial and legal knowledge. If your chosen trustee does not have a background in law, finance or trust administration, they may struggle with managing the trust effectively.
Aside from the financial and legal responsibilities of a trustee, it would help if you also considered the potential impact of this decision on your family relationships. For guidance on making the best choice for your situation, consider consulting with an estate planning attorney to help you ensure your trust is managed smoothly.
