J. Kelly Kennedy, Attorney/CPA, PLLC

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The pro and cons of naming a loved one as trustee

As recent posts have explained, many times, a resident of Polk County, Florida, who decides to use a trust as his or her estate planning vehicle will want to name a trusted loved one as his or her trustee. While this decision is often based on affection, it should be backed up by a careful evaluation of whether or not a family member or close friend would actually make the best trustee.

After all, trustees are a lot more than personal representatives who spend a period of time, usually several months, wrapping up the affairs of a deceased person and carrying out that person's will. Trustees can have ongoing responsibility for decades, and these responsibilities include the obligation to invest funds prudently and to account for his or her actions.

There are in fact several advantages and disadvantages to naming a family member as opposed to a neutral third party like a financial institution. Generally speaking, a family member or other loved one will not charge a hefty fee for their trust administration, especially if that person happens to have a personal interest in how well the trust performs. Moreover, a loved one is, obviously, known to the person creating the trust and, hopefully, has inspired that person's confidence.

On the other hand, unless they happen to have related professional experience, family members might not have the knowledge and expertise necessary to handle a complicated trust properly. Moreover, family members might be more likely get swept up in to a family probate or estate fight, whereas a bank or other business is more likely to remain neutral and try to act in the best interest of the trust.

Also, all human trustees can die unexpectedly, fall in to bad health or hard circumstances or be otherwise unwilling or unable to continue to act as a trustee. Having a business act as a trustee better ensures continuity.

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