Serving as a trustee is a significant responsibility that not everyone is equipped to handle on their own. A trustee has a duty to prudently manage the assets in the trust according to the terms in the trust for the beneficiaries of the trust.
Generally speaking, trustees are generally allowed to hire outside help when needed. A trustee may consult with a local attorney to help them interpret and fulfill the terms of the trust. A tax professional may be needed to file taxes on the trust assets. An investment advisor may also be needed to prudently invest the trust assets.
A less common need to hire outside help may arise if the trust contains specialized assets such as real estate, farmland, or valuable collectibles. The trustee’s duty to properly manage trust assets may necessitate anything from a one-time consultation with a specialist or the hiring of someone to properly manage these assets over time.
The ability to hire help, however, is not authorization to relinquish responsibility for the trust to outside parties. The trustee is personally responsible for any mistakes made by the professionals they hire. Additionally, the trustee can also be held responsible if the fees they pay to professionals, or take from the trust for their own time, are considered excessive.
One alternative to the use of an amateur trustee that hires outside help is to use a professional trustee. The ability to use a professional trustee depends on the terms of the trust. Someone drafting a trust can specify that professional trustees be used if they do not have a trusted family member to serve in the role.
However, potential downsides also exist to using a professional trustee. A professional trustee will generally cost more than an amateur family member. While a professional may be better equipped to manage trust assets, they also are less likely to provide a personal touch when dealing with trust beneficiaries. Additionally, not all professional trustees are created equal. A professional trustee that specializes in managing intergenerational wealth may be ill-equipped in managing a special needs trust.
The choice of trustee is one of many important considerations to discuss when drafting a trust with an experienced, local attorney.
To discuss help managing, or setting up, a trust, please call Martha C. Brown & Associates at (314) 962-0186.