The natural inclination when dealing with family money is to put a member of the family in charge of it.
However, putting a family member in charge of a trust could be a recipe for disaster. Friendship and family bonds can often become strained once significant amounts of money are introduced into the picture.
Putting a bank trust department in charge instead may offer some advantages that you want to consider:
— You can avoid conflicts of interest. Even people who start out with the best of intentions can get caught up in the lure of money. It can be hard for someone to separate out what is best for the trust as a whole from what is best for themselves.
— You know that the trust is being professionally managed. Bank trust departments exist to handle the legal requirements of a trust, so you can rest easily knowing that they have the knowledge to make the right investments and file the right tax forms.
— You don’t have to worry about the trust falling into disarray because the trustee becomes ill or is otherwise unable to continue his or her duties. A bank trustee department offers a continuity of service that can’t be assured by family members dropped into that position.
— You have a measure of security provided by the checks and balances of a bank’s trust department. If someone misappropriates trust money, the bank will generally insure the funds.
— You also don’t have to worry about the trustee being “bullied” by another family member. When a family member is put in charge of a trust, it can be difficult to withstand entreaties or demands made by other family members who want access to the funds for inappropriate reasons. A bank official isn’t going to have the same sort of emotional ties — or weaknesses.
It’s important to remember that being a trustee is a job that takes a lot of time, effort and attention. Not everyone is suited for the position — and there may not be anyone in your family who is up to the task. In that situation, a bank’s trust department is certainly a viable option.
To discuss other possible options if you’re troubled over who to name as a trustee, make an appointment with an attorney today. To learn more about how our office could help, please visit our web page.