Many Michigan residents choose to include irrevocable trusts in their estate plans to avoid the probate process and give them more control over how their estates will be administered and their assets distributed. When an individual chooses to create an irrevocable trust, one of the most important decisions they make is selecting the person or organization that will act as their trustee. Many people pick a friend or relative to manage their trust assets, but that is not always a good idea.
A trustee’s responsibilities
A trustee has many important responsibilities, and discharging them effectively requires an individual who is responsible and capable of dealing with complex legal and financial matters. If you create a trust, your trustee may be called upon to:
- Complete and submit estate and income tax returns
- Purchase or sell real estate
- Have trust assets like artwork or jewelry appraised
- Maintain trust assets
- Host estate sales
- Keep accurate records of trust account activity
- Deal with creditors
- Communicate with beneficiaries
Attorneys and corporate trustees
Managing trust assets, maintaining detailed financial records and arranging distributions are estate planning and administration duties that can take up a lot of a trustee’s time, and the workload could be too heavy for a friend or relative with a demanding career and a family to take care of. When trustees are related to or friends with the trust’s beneficiaries, the decisions they make about asset distributions could lead to disputes. This is especially true when requests are denied because beneficiaries have been irresponsible with money in the past. Appointing an attorney or a company that offers trustee services may cost more, but taking this path could avoid these problems.
Peace of mind
Including trusts in estate plans gives individuals more control over how their assets will be distributed, which can provide a great deal of peace of mind. However, trustees should be chosen carefully because they have important duties that require attention to detail. This is why many people choose professionals rather than friends or relatives to manage their assets.