One of the many important reasons to have a comprehensive estate plan in place is to ensure that your children are provided for in the event of your death or incapacity. If your children are still young they cannot inherit directly from your estate. Therefore, many people choose to create a trust to hold onto estate assets until the intended beneficiaries are old enough to inherit the assets directly. A trust that only takes effect at the time of death is known as a “testamentary” trust. Though you will have a number of important decisions to make if you create a testamentary trust as part of your overall estate plan, the most important decision may be who to appoint as the trustee of your testamentary trust.
Whether you have a modest estate or are fortunate enough to have amassed a fortune, chances are good that you intend all, or part, of your estate to be used to provide for your minor children should you meet an untimely death prior to your children reaching adulthood. Because you cannot leave assets to your children directly, you may choose to establish a trust instead. Trusts are broadly divided into two types – living and testamentary. A living trust, as the name implies, takes effect during your lifetime while a testamentary trust doesn’t kick in until your death. All trusts, however, require the Maker to appoint a Trustee. The duties and responsibilities of a Trustee are numerous. Your Trustee’s ability to handle those duties and responsibilities well can mean the difference between a successful trust that grows trust assets and a trust that fails. Therefore, choosing the right Trustee is crucial.
All too often people make the mistake of simply appointing a spouse, sibling, or close friend as the Trustee of a trust based solely on the fact that the individual will have the best interest of the children in mind at all times. A successful trust, however, depends more on the Trustee’s legal and financial knowledge and skills than on his or her intentions. A Trustee should understand the legalities of administering a trust agreement as well as understand all laws relating to the trust terms. In addition, your Trustee will ideally grow the trust assets through wise investing, requiring a good deal of financial know-how. For these reasons, you may wish to consider appointing a professional Trustee instead of a family member or friend. One other benefit of using a professional Trustee is that you avoid the possibility of conflicts of interest that can occur when the Trustee personally knows the trust beneficiaries.
To ensure that you appoint the right Trustee for your testamentary trust, consult with your experienced Texas estate planning attorney. Contact the Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.
- Famous Estates-Champ or Chump? Nelson Mandela - September 27, 2019
- Famous Estates-Champ or Chump? Jane Fonda - September 13, 2019
- Texas Trivia – Name the first of six flags to fly over Texas. - September 6, 2019