Family Wealth Secrets Online Magazine

Trustee Checks and Balances

In last week’s article “How to Choose the Right Trustee,” I mentioned that there are no trust police out there making sure that your Trustee is following the instructions set out in your Trust. That can be scary when you are entrusting your whole life savings and your kids’ financial well-being to this person.

But, there are some checks and balances you can put in place to ease your mind.

1. Name Different People to Be in Charge of Your Money and Your Kids

Many times, people I’m meeting with want to name the same person or people to serve as guardians to take care of their children and Trustees to take care of the money left behind.

They think if they would trust someone to raise their kids, they should trust that person to take care of the money too.

This is not necessarily the case.

The qualities you are looking for in a guardian are not necessarily the same as what you are looking for in a Trustee AND if you name separate people, then they can watch out for each other.

Your children’s guardian would be entitled to regular accountings of Trust assets by the Trustee and could monitor to make sure everything seemed right. And, on the flip side, the Trustee would be in regular communication with the guardian to ensure your kids were getting proper care.

2. Name a Bank or Trust Company to Serve as Co-Trustee

If you don’t have two separate people to serve as guardian and Trustee, you may want to consider naming a Bank or Trust Company to serve as an administrative trustee, responsible for all of the tax-filings, investments, and other compliance issues.

You could give distribution power to the guardian or other family member plus give that person to the right to remove and replace the Bank or Trust Company serving as administrative trustee so long as they were replaced with another independent entity.

3. Begin a Relationship With a Personal Family Lawyer When You are Young and Healthy

When you work with a Personal Family Lawyer to establish your planning while you are young, that is a relationship with will last you a lifetime. And, ideally, your Personal Family Lawyer will continue to guide your Trustee after you are gone so that you can have the peace of mind of knowing your Personal Family Lawyer know will ensure your wishes are carried out.

If you use one or more of these checks and balances, you’ll have very little to worry about when it comes to the care and feeding of your financial wealth after you are gone.