Developing an estate plan in California becomes more complicated as you accumulate assets. Living trusts are frequently an essential part of an estate, yet selecting a trustee for your plans can get overlooked. Before you name someone, consider the following important points.
Who can administer a living trust?
When embarking on estate planning, many people select a trusted family member to manage their living trusts. If you do so, ensure your family member or trusted friend is up to the job. Other options include naming a professional, like an accountant, financial planner, lawyer or a bank’s trust department, as the administrator. Note that using such individuals could result in substantial annual fees. People frequently use various living trusts to manage their estates when they have considerable assets.
When evaluating who to name as the trustee, these five factors should guide your decision:
- Has considerable financial knowledge
- Hiring a professional co-trustee to help
- Situations where professional trustees are preferable
- Type of professional trustee to hire
- The family member can function as a trustee
You may want to name a family member or friend to manage your assets because you fully trust that individual. Yet, the larger your estate, the more difficult it may be to manage. Estate professionals frequently recommend that estates over $5 million should have a hired professional overseeing at least part of the assets.
How living trusts benefit you
When you create a living trust as part of your estate plan, you technically do not own the assets, instead, the trust does, so the assets receive protection from creditors following your death. However, while alive, you retain control and flexibility over how the assets are managed and distributed. The trust includes instructions on managing and distributing assets if you become incapacitated or when you pass away.
Choosing someone who will carry out your wishes according to the trust documents is essential. Living trusts allow you to change the terms of the trust, add or take away assets, plus change administrators if your needs and wishes change. Review living trust documents every few years for possible updates.