Those doing their estate planning have several options regarding the financial vehicles that they employ. Trusts remain a popular option. Spendthrift trusts are a specific subgroup of that type.
When funding a spendthrift trust for a loved one, it’s vital to ensure the trustee is up to the task. It’s also important to remember that even qualified trustees might not be the best choice if they are family members of the recipient.
Why relatives aren’t the best choice
Whenever money is involved, and another person has control of the purse strings, there is a potential for dissent. The last thing you want to cause is an argument between the beneficiary and trustee over the distribution of the trust’s funds.
That can all be sidestepped by appointing a trusted professional with the right attributes and skill set, including the following:
- Financial savvy to manage/maintain the trust principal
- Investment experience
- Excellent communication skills
These are not the sole characteristics of a competent trustee, but they are the bare minimum to expect from their services.
Cost can be a factor
For modest trusts where keeping the principal reinvested is primary, you might consider a co-trustee where someone connected to the beneficiary handles the day-to-day estate needs and works together with a professional trustee.
This could be the financial compromise you need to ensure the estate remains funded and managed for the duration you intend.
Have more questions?
That’s understandable. Learning more about Michigan’s laws regarding estate planning is always a wise choice.