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Important issues to consider when choosing a trustee

Establishing a trust can provide must-appreciated peace of mind for individuals in New York looking to ensure that important assets are distributed appropriately to a spouse, children, other family members or close friends. One of the most critical steps in establishing a trust fund for the preferred beneficiaries is to determine who will be the trustee. There are some issues anyone setting up a trust may want to consider to improve their confidence when naming a preferred trustee.

Discussing the possibility of being named a trustee with a candidate for this role can be helpful. Some individuals assume that a relative with business or financial experience will automatically be willing and able to handle estate administration responsibilities without asking them if they wish to accept this responsibility. In some situations, the nature of the estate can matter. For instance, it may be preferable to have someone with real estate experience handle an estate largely comprised of real estate holdings.

In some cases, naming a certain trustee can affect family relationships. It's human nature for some animosity or resentment to exist if one family member is selected over others to serve as trustee. This isn't always the case, but it's something a trust holder may want to consider. Also, because it's possible to misuse assets, there is sometimes a certain degree of risk associated with naming a sole individual as a trustee. For this reason, some individuals prefer to name a bank or similar institution as trustee. Another option is to name both a single person and an institution or organization as co-trustees for added protection.

A lawyer familiar with the estate planning process may be able to help someone setting up a trust better understand their options when naming a trustee before any decisions are made. An estate attorney may also work to set up a trust in a way that eases tax burdens on beneficiaries.

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