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OK, I Want a Trust but Who Should be the Trustee?

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  • OK, I Want a Trust but Who Should be the Trustee?

    Picking up on an earlier thread, I am increasingly inclined to a revocable living trust held jointly with my wife in order to avoid probate. I assume the adult kids will just liquidate the assets as beneficiaries, but we are still thinking that through. But my real question for the Forum: any thoughts about who to make the successor trustee (after second to die of my spouse or me)?

    I don’t really want to bring my siblings into our financial affairs. And, while I’m inclined to my oldest daughter, she is still young at 27. Should I pair her with an institutional trustee like Vanguard? Or is this something I could entrust completely (no pun intended) to an institutional trustee.

    Please think of this question as more about the generic options than strictly about my choices. I am trying to get some perspective on what others have decided to do.

  • #2
    My attorney told me not to use Vanguard or Fidelity.  According to him, and according to what I was able to confirm on my own, they will only manage the portfolio.  They won't disburse funds, or make decisions about appropriate expenditures.  He recommended Boston Private Bank to me (and  they happen to have a branch 4 blocks from my house ) , and I met with them.  Trust management seems to be a big part of their business.  They will take a hands on approach, and they use Fidelity index funds for investments.   I was comfortable with the trust officer I met with, and was impressed with the anecdotes she relayed to me concerning their hands-on management ( e.g. choosing and limiting the car the child is allowed to purchase ).  No cost unless they actually take over as trustees.  At that point it's a sliding AUM scale ( separate fee schedule for real estate management ) that came out to around 1%.   I don't think my siblings could manage the money and there would be a moral hazard involved as well.   I'm sure that many other banks can do a good job as well.  My kids get half at 35 and the rest at 40, but if I'm around when they are in their mid 20's I might let them take over some or all directly if they seem reliable.

    Of course, don't rely on me.  Investigate for yourself and let us know what you find.

    Comment


    • #3




      Picking up on an earlier thread, I am increasingly inclined to a revocable living trust held jointly with my wife in order to avoid probate. I assume the adult kids will just liquidate the assets as beneficiaries, but we are still thinking that through. But my real question for the Forum: any thoughts about who to make the successor trustee (after second to die of my spouse or me)?

      I don’t really want to bring my siblings into our financial affairs. And, while I’m inclined to my oldest daughter, she is still young at 27. Should I pair her with an institutional trustee like Vanguard? Or is this something I could entrust completely (no pun intended) to an institutional trustee.

      Please think of this question as more about the generic options than strictly about my choices. I am trying to get some perspective on what others have decided to do.
      Click to expand...


      At 27, I was rec changes to my parents portfolio. I think that is old enough to be made trustee once you die. Why do you feel your child is ill prepared?

      Comment


      • #4
        AlexxT, thanks for sharing. I had not considered the possibility of additional fees for having real estate in the trust. I will have to incorporate that factor as well since the initial assets will include three properties.

        I agree with bringing the kids in when they are ready. Our kids are in their twenties and we are keeping them aware of the property management issues. My goal is no surprises when the time comes.

        Comment


        • #5







          Picking up on an earlier thread, I am increasingly inclined to a revocable living trust held jointly with my wife in order to avoid probate. I assume the adult kids will just liquidate the assets as beneficiaries, but we are still thinking that through. But my real question for the Forum: any thoughts about who to make the successor trustee (after second to die of my spouse or me)?

          I don’t really want to bring my siblings into our financial affairs. And, while I’m inclined to my oldest daughter, she is still young at 27. Should I pair her with an institutional trustee like Vanguard? Or is this something I could entrust completely (no pun intended) to an institutional trustee.

          Please think of this question as more about the generic options than strictly about my choices. I am trying to get some perspective on what others have decided to do.
          Click to expand…


          At 27, I was rec changes to my parents portfolio. I think that is old enough to be made trustee once you die. Why do you feel your child is ill prepared?
          Click to expand...


          She is mature enough at 27 if not yet financially savvy. The other issue is the dynamic with the younger brother, who is actually more financially astute but less mature.

          Comment


          • #6










            Picking up on an earlier thread, I am increasingly inclined to a revocable living trust held jointly with my wife in order to avoid probate. I assume the adult kids will just liquidate the assets as beneficiaries, but we are still thinking that through. But my real question for the Forum: any thoughts about who to make the successor trustee (after second to die of my spouse or me)?

            I don’t really want to bring my siblings into our financial affairs. And, while I’m inclined to my oldest daughter, she is still young at 27. Should I pair her with an institutional trustee like Vanguard? Or is this something I could entrust completely (no pun intended) to an institutional trustee.

            Please think of this question as more about the generic options than strictly about my choices. I am trying to get some perspective on what others have decided to do.
            Click to expand…


            At 27, I was rec changes to my parents portfolio. I think that is old enough to be made trustee once you die. Why do you feel your child is ill prepared?
            Click to expand…


            She is mature enough at 27 if not yet financially savvy. The other issue is the dynamic with the younger brother, who is actually more financially astute but less mature.
            Click to expand...


            Well it's only an issue if you die today. Hopefully they will progress well by the time you die.

            Comment


            • #7













              Picking up on an earlier thread, I am increasingly inclined to a revocable living trust held jointly with my wife in order to avoid probate. I assume the adult kids will just liquidate the assets as beneficiaries, but we are still thinking that through. But my real question for the Forum: any thoughts about who to make the successor trustee (after second to die of my spouse or me)?

              I don’t really want to bring my siblings into our financial affairs. And, while I’m inclined to my oldest daughter, she is still young at 27. Should I pair her with an institutional trustee like Vanguard? Or is this something I could entrust completely (no pun intended) to an institutional trustee.

              Please think of this question as more about the generic options than strictly about my choices. I am trying to get some perspective on what others have decided to do.
              Click to expand…


              At 27, I was rec changes to my parents portfolio. I think that is old enough to be made trustee once you die. Why do you feel your child is ill prepared?
              Click to expand…


              She is mature enough at 27 if not yet financially savvy. The other issue is the dynamic with the younger brother, who is actually more financially astute but less mature.
              Click to expand…


              Well it’s only an issue if you die today. Hopefully they will progress well by the time you die.
              Click to expand...


              For sure. Not just me, but my wife also. I’m probably trying to do too much by setting the RLT and hoping not to have to revise it. More likely, I’ll set it up and my wife and I will update it over time.

              Comment


              • #8
















                Picking up on an earlier thread, I am increasingly inclined to a revocable living trust held jointly with my wife in order to avoid probate. I assume the adult kids will just liquidate the assets as beneficiaries, but we are still thinking that through. But my real question for the Forum: any thoughts about who to make the successor trustee (after second to die of my spouse or me)?

                I don’t really want to bring my siblings into our financial affairs. And, while I’m inclined to my oldest daughter, she is still young at 27. Should I pair her with an institutional trustee like Vanguard? Or is this something I could entrust completely (no pun intended) to an institutional trustee.

                Please think of this question as more about the generic options than strictly about my choices. I am trying to get some perspective on what others have decided to do.
                Click to expand…


                At 27, I was rec changes to my parents portfolio. I think that is old enough to be made trustee once you die. Why do you feel your child is ill prepared?
                Click to expand…


                She is mature enough at 27 if not yet financially savvy. The other issue is the dynamic with the younger brother, who is actually more financially astute but less mature.
                Click to expand…


                Well it’s only an issue if you die today. Hopefully they will progress well by the time you die.
                Click to expand…


                For sure. Not just me, but my wife also. I’m probably trying to do too much by setting the RLT and hoping not to have to revise it. More likely, I’ll set it up and my wife and I will update it over time.
                Click to expand...


                Of course you'll have to revise it. That's the point!

                Comment


                • #9
                  Our experienced trust attorney cited endless hapless examples of family trustees gone bad,...….as in heartache, busted families, suits, etc.   He recommended paying up for an institutional trustee.

                  Comment


                  • #10


                    I had not considered the possibility of additional fees for having real estate in the trust.
                    Click to expand...


                    The different fees are because they generally charge less than the AUM fee, but they do charge something.  They should have a fancy brochure to show you with all the fees and services.


                    At 27, I was rec changes to my parents portfolio. I think that is old enough to be made trustee once you die. Why do you feel your child is ill prepared?
                    Click to expand...


                    Perhaps you were mature enough to manage all that money,  but it's not simply a matter of managing a portfolio.  Look at all the bad mistakes that people describe on this forum:  Taking out too many loans.  Bad investments.  Whole life insurance.

                    Giving a 27 year old a few million dollars when they have next to no life experience is a bad idea.  Maybe they'll blow it all opening a restaurant, or funding their friend's movie.  By having the money in the trust, and waiting, they may be in a better position to manage the money.  If they get it all at once, and they make a mistake, it's all gone.  The trust will give half first, so if they mess up, at least they have half left over so they can try again.

                     

                    Comment


                    • #11
                      Click to expand…




                      Perhaps you were mature enough to manage all that money,  but it’s not simply a matter of managing a portfolio.  Look at all the bad mistakes that people describe on this forum:  Taking out too many loans.  Bad investments.  Whole life insurance.

                      Giving a 27 year old a few million dollars when they have next to no life experience is a bad idea.  Maybe they’ll blow it all opening a restaurant, or funding their friend’s movie.  By having the money in the trust, and waiting, they may be in a better position to manage the money.  If they get it all at once, and they make a mistake, it’s all gone.  The trust will give half first, so if they mess up, at least they have half left over so they can try again.

                       
                      Click to expand...


                      I appreciate the sentiment. That said, in my case I am not trying to control from the grave as much as set up the estate to avoid probate. For example, we already have our two adult kids as contingent beneficiaries on millions of dollars in tax deferred accounts were we both to die. While I hope to avoid that scenario, man plans and God laughs. I may need to step up my education campaign for the kids...

                      Comment


                      • #12
                        You plan on leaving millions on your children, but even in their late 20's you don't trust them with money?

                        You and your wife should start spending (more) money on them (and yourselves) now. What's the point in saving a gagillion dollars if you're terrified as to how it will be squandered after you croak? You've won the game, have some fun with your success.

                        While there are certainly many stories of profligate children burning through their inheritance in short amount of time, there are also plenty of stories of trustees and financial institutions bilking trusts for their own benefit.

                         

                        Comment


                        • #13
                          You guys realize no one ever writes a story that says "adult child looses both parents, estate used moderately, never exhausted, and passed onto their children" right?

                           

                          Not all kids will squander away your estate. Some will. You know who you are.

                          Comment


                          • #14




                            You plan on leaving millions on your children, but even in their late 20’s you don’t trust them with money?

                            You and your wife should start spending (more) money on them (and yourselves) now. What’s the point in saving a gagillion dollars if you’re terrified as to how it will be squandered after you croak? You’ve won the game, have some fun with your success.

                            While there are certainly many stories of profligate children burning through their inheritance in short amount of time, there are also plenty of stories of trustees and financial institutions bilking trusts for their own benefit.

                             
                            Click to expand...


                            ZZZ, love the tough love, but you are misreading the situation just a bit. I plan on spending every penny and having the last check bounce. By then the kids will be successful and financially secure on their own. But...we haven’t done any effective estate planning, so I am leaning on the Forum for some perspective as I embark on the planning for the case where my wife and I are tragically cut down in our prime? In an “ah ha” moment, as I was responding to the comments about the RLT, I realized we had in effect already created the situation I was nominally trying to avoid by having the kids as contingent beneficiaries. So, the choices are clarifying.

                            Comment


                            • #15
                              Sorry for my ignorance, but I must be missing a key point. There is no charge for Boston Private Bank to act as trustees unless they manage the assets? What exactly is their role otherwise and what’s in it for them?
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