28 LAWYER MONTHLY JULY 2023 dynasty trust can be created with an independent trustee who will manage the trust assets for the beneficiary. This does not violate any rules of the dynasty trust, but it is used for an ‘off-brand’ purpose, simply because of the nature of the trust characteristics. What guidance would you offer to a new client on selecting the right trustee? At the core, each trustee should be a trustworthy and intelligent adult. A trustee does not need to be a financial guru. Rather, the trustee should be a smart and reliable person who is willing to hire the right people to help navigate the world of trusts. The trustee should be willing to use an estate planning attorney and tax preparer to help with the trust administration. The trustee may also need to consult with asset specialists, like a financial planner to help with investments or a realtor if real estate needs to be sold. When should a client choose co-trustees? Naming co-trustees can also be beneficial but should be carefully considered. If your chosen co-trustees fight every time they get together, they will probably continue to fight as co-trustees. In my experience, a client’s death is not likely to improve relationships. Co-trustees can be very useful in certain situations. Naming different co-trustees can allow each person to lend their skills. co-trustees can also be useful to minimise conflict and provide perspective. Perhaps an older and wiser family member would be well suited to serve as a co-trustee with a younger and less experienced trustee. What if the trustee lives far away? Distance should be a factor in choosing a trustee, but there are also other issues to consider. In the future, the trustee may need to visit or sell specific property, arrange for the transfer of personal items, or even visit specific banks to transition accounts. These tasks can be time-consuming and labour-intensive. They tend to be easier for a trustee who lives nearby or who can travel and stay for a week or more to manage these tasks. In the past, living far away made accessing trust funds and paying bills very difficult. However, with increased accessibility to financial arrangements online, daily financial management can be done at a distance. What if the client has no potential trustees? If a client has no family or friends to name as trustee, consider a licensed professional trustee (also called a private fiduciary) or a bank to serve as trustee. They can generally be relied upon to make professional and responsible decisions. However, there are other factors to consider. Professional trustees and banks do not work for free. In some cases, trustee fees may make their effort impractical. Professionals are likely to take great care in administering the trust, perhaps taking steps a layman would consider unnecessary. This can be frustrating to beneficiaries who have little patience for accounting procedures or financial record keeping practices. Professionals may hesitate to serve as cotrustee with a family member or layman. Many professionals report that serving as co-trustee with a less experienced trustee tends to raise trust expenses a great deal and may expose the professional to potential liability.
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