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What to consider when choosing a trustee

On Behalf of | Jul 30, 2018 | trust and estates/taxation

Trusts are valuable estate planning tools that can be utilized to any number of ends. Connecticut residents can use trusts to minimize estate taxes, avoid probate and more easily pass assets to heirs. While people usually understand that selecting the right type of trust and funding it correctly is important, they often forget about what it takes to name the right trustee

A trustee is a person who is in charge of making important decisions regarding a trust, including making distributions, managing investments and paying taxes. These tasks may seem straightforward, but they require a specific skill set. This makes choosing the right person to fill the role almost as important as establishing the trust itself, as mismanagement could quickly derail the original plans and limit what a beneficiary receives. 

Close family members may not be the most appropriate choice for a trustee. Not only must they have the necessary skills to properly manage a trust, but it is not a good idea to select a person who may have potential conflicts of interest. A friend or carefully researched professional may be a more appropriate choice, and even then, some choose to have multiple people take on the responsibility. These are known as co-trustees, with one person usually handling one aspect of the trust — such as distributing assets or filing taxes — while the other deals with other matters. 

When it comes to the effectiveness of any given trust, the right trustee can make all the difference. Taking the time to carefully select the right person or people for the job is essential, but it does not end there. People in Connecticut should be certain that they conduct an annual review of their estate plans and make changes as necessary, which may include choosing a new trustee.