Choosing a trustee for a living trust

Arizona residents include living trusts in their estate plans to help their family members and other beneficiaries avoid the lengthy, complex and sometimes expensive probate process. Living trusts provide individuals with more control over how their assets will be distributed after they pass away, which can be an important consideration when their beneficiaries have handled money poorly in the past or have special needs. A living trust usually becomes irrevocable after the creator’s death, so it is prudent to appoint a trusted individual who is comfortable dealing with financial matters to act as trustee.

Choosing a trustee

Managing a living trust involves accepting responsibilities that can may last for several years if the beneficiaries include minor children, so choosing a trustee in their golden years may not be wise. Trustees should feel comfortable dealing with professionals like attorneys, accountants and financial planners, and they should not shy away from making difficult decisions. When a trusted friend or relative is appointed to manage a living trust, it may be a good idea to appoint a professional co-trustee to assist them.

Appointing a professional trustee

Many attorneys and accountants who are experienced in estate planning matters will act as trustees for a fee, and there are also companies that provide these services. Professionals are not prone to mistakes and can provide a calming voice when beneficiaries become embroiled in disputes, but their services can be costly. Most trust companies charge between 0.5% and 2% of a trust’s value for management services, which means their fees can reach six figures when trusts are worth $5 million or more. Professional fiduciaries are often preferred by individuals who create smaller living trusts because they usually charge an hourly rate instead of a percentage.

Peace of mind

Individuals include living trusts in their estate plans to avoid probate and provide peace of mind, but they should think carefully when they choose their trustees. Managing assets and investments and keeping beneficiaries happy requires skill and tact, and not all people possess these traits. This is why many living trust creators choose professionals to be their trustees.