Chayet & Danzo, LLC Chayet & Danzo, LLC
Call for a Free Initial Consultation
Direct 303-872-5980
Toll-Free 888-472-1088
Email Us
Compassion, talent and dedication: guiding colorado families and Their Trusted Advisors During Times of Need

Relative or professional trustee: What are the pros and cons?

When setting up a trust – whether a special-needs trust for a child or a testamentary trust – deciding on the right trustee is crucial. When your will leaves money or property to a trust, your estate personal representative will transfer those assets. But then, his or her role is complete.

A trustee’s duties may continue for many years and sometimes for generations. We covered some of the management and distribution duties in our February 2017 post. In this post, we share pros and cons to consider when selecting a trustee.

Family members or other relatives

One major reason that most people name a son, daughter, niece or nephew is cost. Relatives usually agree to volunteer for the role. For small- to medium- sized trusts, this can make sense when you have a relative with financial acumen and little concern about potential family conflict.

When naming a relative as a trustee, name a successor or multiple successors to take over in case of a death or incapacity.

If a potential trustee worries about taking on the role, another option is to hire an institutional co-trustee. A bank or investment company often charges a smaller fee for investment advice in the capacity of a co-trustee.

The negatives for appointing a relative as a trustee are lack of expertise investing money. This could lead to losses if the person tries to beat index funds by day trading or moves all assets into one investment like gold. Family conflict is another risk. A brother with a frugal nature may deny requests made by a sibling as wants, not needs. It could strain relationships and even lead to litigation.

Banks and trust companies

These institutional investors are good at what they do and have procedures in place for managing trusts in an objective manner. This can be helpful when there are several beneficiaries and worries about potential family conflict. They also will be around for the long term.

A disadvantage is their cost; request a schedule of fees before deciding on a trustee. These fees are generally deductible against income for tax purposes. These institutions are also not great at the interpersonal – beneficiaries may not find a sympathetic ear when discussing questions or needs.

Before ever appointing a relative as a trustee, have a candid conversation to ensure that he or she understands the role and agrees to accept the responsibility. When you have any concern about family relationships, work with an experienced estate planning attorney to develop a workable plan. It may be a last gift to loved ones.

No Comments

Leave a comment
Comment Information

Watch Our Firm Video

We are the premier Elder Law firm in the Colorado region. We set ourselves apart from other law firms in the area with our talent, dedication, compassion and ability of our attorneys to handle any case in Elder Law. We serve Colorado families with experience and dignity in your time of need.

View More Videos

Denver Office
650 S.Cherry St., Suite 710
Denver, CO 80246

Toll Free: 1-888-472-1088
Phone: 303-872-5980
Fax: 303-355-8501
Denver Law Office Map

Edwards Office
105 Edwards Village Blvd.
Edwards, CO 81632

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Edwards Law Office Map

Aspen Office
600 East Hopkins Avenue
Suite 301
Aspen, CO 81611

Toll Free: 888-472-1088
Toll Free: 1-888-472-1088
Fax: 303-355-8501
Aspen Law Office Map

  • Rated by Super Lawyers Macro Chayet
  • Rated by Super Lawyers Frank J. Danzo, III
  • Member National Academy of Elder Law Attorneys, Inc. TM
  • Avvo Rating 10.0 Superb Top Attorney Elder Law
  • 2015 Five Star Professional Wealth Manager Multi-Year Winner
  • Our new 2015 Medicaid Book: how to protect your Family's Assets from devastating nursing home costs
  • Proud Sponsor 2015-Denver Colorado Senior Law Day
  • Peer Review Rated For Ethical standards & Legal Ability TM Martindale Hubbell
  • Haystack