Trust Administration

Choosing Trustees: Should You Put Your Child in Charge of Your Life?

September 19, 2023 | by Braverman Law Group

Choosing a trustee can be just as important as establishing a trust itself. Often, an individual will designate their child to help administer their plan for the trust. Clients may believe that appointing their child as a trustee will save them the expense of hiring a professional fiduciary. However, in some circumstances, the expense may be worthwhile. Before appointing your child as a trustee, you should consider the potential drawbacks of putting your child in charge of your life.

What Problems Can Arise When a Child Is a Trustee?

One major issue with appointing a child as a trustee is the inherent conflict of interest. A child trustee is also a likely beneficiary of your trust. While the trustee must be fair in administering the trust’s assets, a child trustee must balance that obligation with their own interests in the trust. Problems can occur even when the child trustee does not intend to prioritize their personal interests. The sheer potential for a conflict of interest may lead a child trustee to believe their decisions are fair when they are actually self-serving.

Additionally, if you have multiple children, appointing one child as a trustee can breed jealousy among siblings. Some clients wish to designate all of their children as co-beneficiaries to avoid this precise issue. However, appointing multiple child trustees can lead to problems with agreeing on the important decisions that the role of a trustee requires. In addition to these problems, biases may arise if a child must administer a parent’s assets to a stepparent beneficiary, with whom their relationship may be more fraught.

Selecting A Good Trustee to Manage Your Family’s Trust

June 13, 2023 | by Braverman Law Group

When it comes to estate planning, selecting a proper and capable trustee is one of the most important steps in the process. A trustee takes legal ownership of trust assets, manages the trust, and is responsible for carrying out the purpose of the trust.

Important Factors for Choosing a Trustee

There are several important things to consider when assigning a trustee. Most people choose a friend, family member, attorney, or corporate trustee to oversee their assets. Before making the final choice, consider the following things: (1) The potential trustee’s availability, (2) their ability to be responsible, (3) their level of expertise, and (4) any costs associated with choosing that trustee. Weighing these factors is important and can have a big impact on your asset management in the future.

Availability

Make sure that you and the future trustee are on the same page when it comes to the time commitment involved with being a trustee. Depending on your assets and the structure and type of trust you utilize, serving as a trustee can be demanding. Trustees may be required to spend substantial amounts of time processing requests, mediating between parties, and making decisions regarding the trust. Not everyone has the time or ability to be fully available for such a process, and you don’t want that to negatively impact the running of your trust.

Can Colorado Trust Beneficiaries Remove a Trustee?

March 10, 2023 | by Braverman Law Group

Family trusts can offer a lot of advantages, including tax advantages and benefits from long-term care planning. However, it is not uncommon for there to be disputes and conflicts between trustees and beneficiaries. When such disputes arise, there may be a time when you consider whether a trustee needs to be removed and you may be wondering what this entails.

Understanding the Terms

As a quick review of some essential terms, the person who creates a trust is called a trustor, grantor, or settlor. A family trust is created when the trustor and the beneficiaries of a trust are members of the same family. A trust agreement is the legal document that sets up a family trust, and the agreement typically designates an initial trustee or two or more initial co-trustees. The trust agreement also designates one or more successor trustees in the event that the initial trustees are no longer able to serve (i.e. in cases of death, removal, or resignation). The trust agreement should include the circumstances under which a trustee may be removed by the trustor.

Understanding How Removal Works in a Revocable Trust

It is important to note that the removal of a trustee is governed both by the trust agreement and by state law. When looking at a trust agreement, in a revocable trust, the trustor may amend the trust agreement in order to remove a trustee. Trust agreements typically allow the trustor to have the ability to remove a trustee, and this may be done at any time and also may be done without the trustee giving a reason. However, in an irrevocable trust, the trustor cannot remove a trustee.

The Benefits of Choosing a Professional Trustee to Manage a Colorado Trust

March 26, 2021 | by Braverman Law Group

After creating a Colorado estate plan that contains a trust, there is one final step: choosing the trustee to oversee the trust after the creator of the estate has passed away. The trustee manages the assets in the trust and distributes the assets according to the creator’s wishes. A lot of people have misconceptions about who to pick as their trustee, assuming that picking a family member will be more cost-effective and no one knows them better than a loved one. However, there are benefits to picking a professional trustee instead—and all the knowledge and experience that comes with one. Below are common misconceptions people have about choosing a professional trustee and why they are ultimately incorrect in holding these assumptions.

A Professional Trustee Does Not Understand Me or My Family’s Dynamics

Many individuals worry that if they hire a professional trustee, they are choosing someone who does not know them and their family—as compared to picking a loved one to serve as trustee. However, professional trustees not only strive to get to know their clients but also come with the experience to navigate the complicated nature of estate planning. A major part of a trustee’s job is to fulfill the creator’s written wishes. To do so, they build strong relationships with families by learning more about them and treat beneficiaries as partners during the administrative process.

The Basics of Colorado Successor Trustees

March 11, 2021 | by Braverman Law Group

While creating a trust is critical for many people and their loved ones, it may seem complicated at first. There are also important decisions that must be made throughout the process that will impact the beneficiaries and the assets within a Colorado estate plan. One such choice is who to designate as the successor trustee to a revocable living trust. A successor trustee is appointed to take over the trust when the creator of the trust—who normally serves as the initial trustee—becomes incapacitated or dies. Because the successor trustee has important responsibilities, it is important to choose the right person to serve this role.

Initially, the person creating the revocable trust normally acts as the trustee. However, in an irrevocable trust, someone else must be appointed to this position. The successor trustee’s role only comes into play when the initial trustee can no longer manage the trust. When the initial trustee either passes away or becomes incapacitated, the successor assumes control of the trust.

While a successor trustee’s role may seem similar across all successor trustees, this is not the case. The exact duties the successor trustee must undertake depends on the terms set in the trust agreement. The successor trustee often appraises the value of all the assets in the trust, pays all taxes, and sets aside funds for expenses the trust may incur. Regardless of the specifics of the trust, the main duty of all successor trustees is to handle the transfer of assets to the beneficiaries and ensure that they follow the terms written in the trust. Unlike an estate executor, a successor trustee’s role may continue for years after the initial trustee’s passing. For example, the initial trustee may leave a grandson assets that they do not want him to receive until his 25th birthday. If the initial trustee passes when the grandson is 14 years old, the successor trustee must safeguard his inheritance until his 25th birthday.

A Primer on Colorado Trusts

November 10, 2020 | by Braverman Law Group

Trusts are an essential component of most Colorado estate plans. However, despite their importance, many individuals do not understand the basics of a trust, including their key concepts and terms. While trusts can sometimes be complicated, the following post breaks down the essential aspects and terms associated with a Colorado trust.

What is a Trust and Who is Involved in the Process?

A trust is a legal agreement involving at least three parties, where one party holds and distributes assets on behalf of another. The terms of the trust – which all parties must abide by – are included in a legal document called the trust agreement.

As mentioned previously, there are three parties involved in a trust agreement. The first party is called a trustor, who creates the trust and is giving away, or transferring, the assets. The second party is called the trustee, who manages the trust and its assets. The trustee is legally obligated to manage the trust in the best interest of those receiving the assets and also consistent with the terms of the trust agreement. The third party is called the beneficiary, who will receive the assets in the trust. They are called the beneficiary because they benefit from the trust. It is important to note that the same person can be in more than one of these roles, even at the same time. For example, often, the same individual will be the trustor and the trustee.

How to Pick the Right Trustee for a Colorado Estate Plan

August 12, 2020 | by Braverman Law Group

Choosing a trustee to manage a Colorado trust after someone has died may seem like a simple decision; however, much thought should be put into it. From keeping a detailed record of trust account activity to reporting the income tax liability of the trust, performing the duties associated with being a trustee can often be both overwhelming and immensely important. While the first instinct might be to pick a friend or family member to serve as trustee for the estate, there are compelling reasons why a professional trustee should be chosen instead.

Managing an estate can often be very technical and time-consuming. Because of this, there are factors to take into account when selecting a trustee:

Cost

It may seem logical that having a family member serve as a trustee would be cheaper than hiring a professional; however, this is not often the case. Individual trustees, unlike fiduciary institutions, must hire other professionals like attorneys and CPAs to help them perform estate-related duties. These costs are often unexpected and not included when calculating the overall cost of a trustee. On the other hand, corporate trustees often provide these services in house and are bundled into a comprehensive fee.
Additionally, inexperienced trustees will often forget that the residence of a trustee determines the income taxation of a trust and its relevant state law. On the other hand, professional trustees may also have an office in a state that will avoid state income tax on the estate.