The question of whether you can designate advisors to help a trustee is a common one, and the answer is generally yes, with careful planning and proper documentation within the trust document itself. While the trustee holds the ultimate fiduciary responsibility, they aren’t expected to be experts in every field relevant to managing the trust assets. Designating advisors provides support and guidance, ensuring informed decision-making and mitigating potential risks. This is especially crucial for complex estates involving real estate, businesses, or investments, or when the trustee lacks specific expertise. A well-defined advisory structure can significantly enhance the administration of a trust and protect the beneficiaries’ interests, and it’s a conversation every estate planning attorney like myself, Ted Cook, has with clients.
What happens if my trustee lacks financial expertise?
It’s not uncommon for individuals to name loved ones as trustees who, while trustworthy and caring, may lack the financial acumen to manage complex assets. According to a recent survey by the American Academy of Estate Planning Attorneys, approximately 60% of trustees report feeling overwhelmed by the financial aspects of trust administration. This is where trust advisors come in. You can appoint a “trust protector” or grant the trustee the authority to engage professionals such as financial advisors, accountants, real estate managers, or legal counsel. The trust document should clearly define the scope of their authority, compensation, and how disagreements will be resolved. For example, a trust might state that the trustee must consult with a certified financial planner before making any investment decisions exceeding $50,000.
Can I empower a ‘trust protector’ to oversee things?
A trust protector is a designated individual who holds specific powers over the trust, such as modifying administrative provisions, removing and appointing trustees, or even altering the trust’s beneficiaries under certain circumstances. This role provides an additional layer of oversight and flexibility. Consider the story of old Mr. Abernathy. He named his daughter as trustee, but she was more focused on her career than on managing the family’s substantial real estate holdings. The trust document allowed for a “property manager” to be appointed, giving them the authority to handle day-to-day maintenance, tenant relations, and financial reporting. This alleviated the burden on the daughter and ensured the properties were well-maintained, preserving their value for the beneficiaries. Without this foresight, the properties could have fallen into disrepair, leading to significant financial losses.
What if disagreements arise between the trustee and advisors?
Disagreements can absolutely arise, and a clear dispute resolution mechanism is crucial. The trust document should outline a process for resolving conflicts, such as mediation or arbitration. It’s also wise to establish a hierarchy of authority. For instance, the trust might state that in the event of a disagreement regarding investment strategy, the opinion of the designated financial advisor prevails. I remember a case where two brothers were co-trustees of their mother’s trust. One brother, a retired accountant, wanted to invest conservatively in bonds, while the other, a tech entrepreneur, favored riskier growth stocks. The trust document, thankfully, stipulated that a mutually agreed-upon financial advisor would act as a tie-breaker. This simple provision prevented a protracted legal battle and preserved the family’s relationship. Without it, the estate could have been tied up in litigation for years, eroding its value.
How can I ensure my trustee has the support they need?
Proactive planning is key. When drafting your trust, discuss potential challenges with your estate planning attorney and identify areas where your trustee might need assistance. Consider establishing a “trust advisory committee” with ongoing responsibilities. Fund the trust sufficiently to cover the costs of professional advisors. Furthermore, encourage open communication between the trustee and advisors. My client, Mrs. Eleanor Vance, meticulously documented her wishes and provided her trustee, her son, with a detailed “letter of intent” outlining her preferences and providing contact information for trusted advisors. After her passing, the son was able to seamlessly administer the trust, benefiting from the expertise of the professionals she had recommended. This ensured her vision for the estate was carried out effectively, and her beneficiaries received the full benefit of her legacy. Designating advisors isn’t just about providing support; it’s about ensuring the long-term success of the trust and protecting the financial well-being of your loved ones.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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