Are you creating trusts to hold your young beneficiaries’ inheritance until they’re ready for the financial responsibility? If so, you want to select trustworthy trustees who you can be sure will look out for your beneficiaries’ best interests.
Selecting the wrong individuals can jeopardize your family’s financial future and undermine the work you put into building the wealth you’ve generated for the next generation. Conversely, when you make the right choice, a trustee can provide stability, transparency and prudent management.
Understand the role of a trustee
Before selecting trustees, you should understand what you can expect from them. Grasping their responsibilities allows you to identify individuals who embody the skills and values you’re looking for. Trustees are more likely to adhere to the terms you set for various trusts if they are prudent individuals who take their fiduciary responsibilities seriously. You also want to select individuals who will be proficient in:
- Record-keep and reporting
- Maintaining accurate financial records
- Providing regular updates to the beneficiaries
You also want to be confident that you can trust the trustees you select to allocate trust funds as stipulated and not use your beneficiaries’ inheritance for their personal gain.
Options for trustees
Suppose you come from a close-knit family; you might want to choose trusted family members who are trustees for young beneficiaries’ trusts. Trusted family members who are familiar with the beneficiaries can better understand and meet their financial needs. Alternatively, you can select professional trustees who will charge a fee for the experience and insight they bring on board.
Choosing a trustee is not a decision to be taken lightly. By understanding the role, evaluating candidates and establishing legal safeguards, you can help ensure trusts fulfill their intended purpose.