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Choosing the right trustee to manage your trust

A key ingredient of most successful businesses is proper management. Likewise, when it comes to running a family's personal finances, it can help to have a person who can properly manage the finances and who understands the different factors involved in making good decisions.

Estate planning is also similar in this regard, as St. Paul residents should not entrust the management of their assets to a person who is ill-equipped for the job. In trust planning, for example, a person should choose a trustee who has the competency and willingness to manage trust assets properly.

The choice of a trustee is crucial in the creation of a trust, as the trustee is the person who will manage the trust property for the benefit of the beneficiaries. In this sense, the trustee is the chief administrator of the trust, and the person or institution that is chosen as trustee will be responsible for documenting the transactions that take place, as well as making sound financial decisions to take into account the needs of the beneficiaries.

The trustee will, of course, take direction from the person creating the trust. If the trustee is directed to use trust assets only for certain purposes, the trustee will be obligated to follow those directions.

However, the trustee also has flexibility when making certain decisions, such as investment decisions to generate income for beneficiaries. This can involve making complicated decisions and utilizing modern portfolio concepts, as well as understanding investment techniques geared toward maximizing the return on investment.

Because of this, individuals often choose an independent professional to manage the trust assets, as opposed to a family member or friend. Others may decide the family member or friend is sufficiently able and willing to make these decisions. Accordingly, it is a personal choice that will vary for each person depending on the circumstances.

Source: Real Vail, "Beyond wills: other essential elements of estate planning," Bruce Hemmings, July 1, 2014

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