An irrevocable trust is a trust that you cannot alter once you’ve officialized it. Such trusts are often useful for reducing estate taxes and protecting your California assets. One of the most important choices you’ll need to make in the creation of an irrevocable trust is the trustee.
What is a trustee?
A trustee is a person or organization who manages the trust and is in charge of carrying out the purposes of the trust. When choosing a trustee, be mindful that their responsibilities will include:
- Collecting trust property
- Diversifying investments
- Enforcing and defending claims
Individual trustees
You can choose an individual person to run your trust. This can be a family member. That said, experts often caution about choosing a single person as a trustee. Even relatively small irrevocable trusts can be complex to manage.
Corporate trustees
Many people choose a corporate trustee, and there are companies that specialize in managing trusts. This can be very helpful as you will have many resources available to you during the formation of the trust, and once you have created the trust, you have an entire team meeting the day-to-day needs of the trust.
Co-trustees
One of the reasons people want to assign an individual whether that be a family member or attorney is for a personal touch. An option is to assign both an individual trustee and a corporate trustee as co-trustees. The corporate trustee can handle the day-to-day but seek the individual trustee for any major decisions. If you choose this approach, you will need to define this relationship in the trust.
Choosing the right trustee is not only important in the execution of a trust but in drafting it. It should be one of the first decisions you make in the process.