By: Laurie Valentine- COO & Trust Counsel
Whether you are using a revocable living trust as part of your plan for management of assets in the event of incapacity or an irrevocable trust for tax planning, one of the most important decisions as you plan the trust is your choice for trustee.
Under Kentucky law, the trustee may be an individual or a bank, trust company or other entity that has trust powers. An individual serving as trustee does not have to be resident of Kentucky nor do they have to be related to you.
As you select a trustee or successor trustee think about the types of assets that are, or may be, in the trust. You will want to name a trustee that understands the management of those types of assets, knows about taxes, investments and financial matters.
The trustee should be someone who is a self-starter. There is little supervision of the management of a trust. Your choice should be someone that will not neglect their responsibilities due to lack of time, interest or knowledge.
Don’t just assume the person or entity you wish to name as trustee is willing to serve. Ask them before you complete your planning. If possible, allow them to review the trust agreement before it is signed to better assure that all necessary powers are granted and that they are clear on any special or unusual provisions.
Finally, make sure that you have selected a trustee who can be objective. Trustees must make decisions that affect the interests of both the income beneficiaries and the remainder beneficiaries. While family members may be appropriate choices, in some cases you may need to consider a professional, corporate or institutional trustee. Corporate trustees are accountable not only to the beneficiaries of the trust, but also to their own management, directors, auditors and other examiners.
The choice of trustee is a crucial decision in the establishment of a successful trust arrangement. Making the best choice requires thoughtful and careful consideration of many factors.
For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.