Selecting a trustee

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A trust often serves as the centerpiece of a comprehensive estate plan. A properly funded trust protects the privacy of your estate and ensures that assets in the trust avoid probate. Typically, a trust will hold all or the majority of your assets.

Upon your incapacity or death, you will need a successor trustee to manage the trust assets. The successor trustee even may continue to manage the trust for younger beneficiaries after your death. Naming successor trustees can be a difficult and important decision, so you should consult with your legal advisor. Below are factors to consider when selecting a trustee:

Experience. Experience administering a trust is helpful, but not necessary. Instead, focus on an individual’s experience with the types of assets they will manage as trustee. If your trust includes real estate or business interests, a trustee unfamiliar with those types of assets may struggle to learn on the job.

Availability. Trust administration can be labor intensive and time consuming. Make sure the person you choose will be available to properly administer the trust.

Personality. The personal aspects of trust administration are just as important as the technical aspects. A trustee will often have broad discretion with regard to distributions from the trust. Also, the trust may have multiple beneficiaries, which may lead to conflicts. If conflict is likely, select a trustee with solid dispute resolution skills to keep the peace.

Relationship to Beneficiaries. Before you select a relative, be sure to consider the relationship between the trustee and the beneficiaries. Trustees may often have to make difficult decisions with respect to the beneficiaries, such as whether to assist a beneficiary with a large purchase or investment. If the trustee and beneficiaries have close relationships, this may cause strain. A trustee should be able to say “no” when it is in a beneficiary’s best interest.

What Not to Consider. Avoiding hurting someone’s feelings is one of the most common reasons for naming a trustee. However, naming a trustee who is poorly suited to the role does a disservice to the beneficiaries. If you feel that you must name a particular individual to spare their feelings, consider your options. Naming a more qualified co-trustee or a corporate co-trustee, such as out affiliated Stifel Trust Company, can help ensure the trust is managed responsibly.

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Article provided by Michael Armon, Jr., Financial Advisor, with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, who can be contacted in the Coeur d’Alene office at (208) 765-7007.

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