Creating and funding a trust can benefit people in a variety of scenarios. Older adults preparing for retirement can use trusts to protect certain assets. Those with vulnerable family members may rely on trusts as a way to leave them an inheritance without putting them at risk.
Taxes, elder care concerns or the desire to leave a charitable legacy could all be reasons for people to create trust instead of relying solely on wills. In addition to setting aside resources to fund the trust, it is also necessary to name someone to administer the trust.
A trustee may need to physically secure assets in some cases or manage financial resources in others. They have to follow the instructions of the trustor when distributing trust assets. Some people decide to hire a professional fiduciary instead of naming someone they know to service trustee. The following are some of the most common reasons that people turn to professionals to help with the administration of a trust.
Concerns about friends and family
Perhaps someone does not have any immediate family members who live in the same state as them. Maybe their closest loved ones have health issues or struggle with addiction. People can potentially choose acquaintances, coworkers and friends as trustees as well. Still, the average person may be reticent to give that degree of authority to someone they don’t know as well as a family member. A professional fiduciary can fill any gaps created by someone’s family size or social relationships.
Worries about conflict
Some trustors have competent and trustworthy people in their inner circles. However, they may worry that trust administration could damage the relationships among their family members. Using a professional fiduciary can limit the strain that trust administration may put on family bonds.
Plans for long-term trust management
Many trusts only need a year or two of administration when someone is older or after they die. However, some trusts require ongoing asset management. People may structure trusts to provide support for generations of their family or to fund charitable causes or scholarships.
If the goal when creating a trust is to create a lasting legacy or source of support, a professional fiduciary may be a better option than a specific trustee known to the person creating the trust. Professional fiduciaries can pass their responsibility on to their successors at work when they retire or have medical issues arise. Individual trustees may not be able to do the same thing, leaving a trust in a vulnerable position if anything happens to the person named as trustee.
Naming the right trustee can be a difficult undertaking for someone developing a thorough estate plan. People who understand that they can hire a professional fiduciary may have an easier time choosing the right party to manage trust resources, given their unique needs and circumstances.