In talking with producers at the Farm Futures Summit, I was asked about the best trustee roles to use for legacy planning. I am not an attorney. I do NOT give legal advice. However, there have been some recent trends worth noting.
Irrevocable trusts are commonly used to move assets out of the estate, and avoid estate tax concerns. An irrevocable trust is permanent, so it’s a special tool for particular situations. But, it is a common estate planning tool.
Every trust names at least one trustee to be the responsible party. There was a time when trustees would be one person who had all the responsibilities of caring for the trust once it was put into force. Today, it’s more common that traditional trust functions are divided among multiple trustees.
Key trustee roles
General or administrative trustee is responsible for maintaining the records and filing taxes for the trust. Often this is a good role for a corporate trustee. They have systems and processes to do this work efficiently and consistently. If you shop around, you can often find a smaller local trust company that provides these services at a value.
Investment trustee is a role that is permitted under most state rules. This would allow the trust to be set up in a favorable state and yet hold a local business and allow the family to continue to work with a trusted investment advisor.
Distribution committees are sometimes used to help with decisions about releasing assets. This establishes a separate fiduciary, or a fiduciary group, to make any decisions about distributions from the trust. This approach can allow you to have a tax expert, an investment expert and a family member all serve to make decisions about which distributions the trust allows and how to make them in the best interest of the beneficiaries.
Trust protector is a separate fiduciary position that holds powers to fire and replace other trustees, change the governing law or the location of the trust. This is a relatively new approach, so discuss it with your attorney carefully.
Other trust roles
There are other trust roles that are less common and might be worth discussing with your attorney. Ask her about:
-Loan director trustee
-Charitable selector trustee
-The power to add beneficiaries
-Power to change in situs and governing law
-Power of appointment
Remember, your job is not to build the trust. Your job is to be clear on your goals and discuss your wishes with your estate planning attorney. There are many legal strategies and instruments that can help you get to your goals.
If this blog has got you thinking about your own situation, get in touch with my office (email@example.com).
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.