Creating trusts as part of your estate plan in New York is just one part of distributing your wealth following your death. Selecting the right trustee for those trusts is essential to fulfilling your wishes. This selection is especially important for irrevocable trusts, as changing the terms can be complicated once you have established the document.
Base trustee selection on several key factors
Trustees take legal ownership of trust assets, manage them and distribute assets at the appropriate time. When selecting trustees as part of the estate planning process, you must consider the different types of trusts and responsibilities that come with each. Before naming a trustee, consider these four questions:
- Does the individual have enough time to devote to trust tasks?
- Can the trustee remain objective about their responsibilities?
- Does the individual have expertise in accounting, banking, law or another related field?
- What costs will your trustee incur?
Serving as a trustee takes tremendous work and knowledge of the tasks at hand. Those developing estate plans often want a trusted friend or family member to handle their wishes. However, such individuals may not have the capacity or knowledge for the job. In such cases, consider naming co-trustees, with one being a professional administrator. Professionals often charge a fee equal to a percentage of the trust assets, so keep this in mind when enlisting professional help.
Why you need more consideration with irrevocable trusts
Assets placed in trusts bypass probate because you don’t own them. The trustee does. Trusts fall into two general types: revocable and irrevocable. With a revocable trust, you can change the terms at any time and even dissolve it. That is not the case with an irrevocable trust. To change the terms, including the trustee, you must go through court hearings, which can be a lengthy process.
This is why you must take greater care when selecting a trustee for any irrevocable trust. Thoroughly review your decision before signing any documents. You’ll want to consider your trustee selection permanent to avoid any future problems and additional costs you or your heirs may incur.