The anatomy of a trust involves the selection of a beneficiary or beneficiaries and a trustee. As the name implies, the beneficiary benefits from the resources that have been conveyed into the trust. The trustee is empowered to manage and administer the funds that have been placed into the trust.
There are various different types of trusts, but we would like to look at the revocable living trust here. With these trusts you as the grantor may serve as both the trustee and the beneficiary while you are still living.
You name successors who will assume these roles after you pass away. The trustee will distribute assets to the beneficiaries in accordance with your wishes as stated in the trust agreement.
Whom should you choose to serve as trustee? Should you select a friend or family member?
While it is natural to attach the word “trust” to someone that you do in fact have confidence in you may want to consider a professional entity rather than an individual that you know personally.
Trust companies and the trust departments of banks are professionals. Their business is to administer trusts effectively. There is inherent oversight built into the organizational structure of these entities, and they are beholden to fiduciary standards.
Another thing to consider is longevity. People pass away, and they sometimes become unable to make sound decisions when they reach an advanced age. Institutions like trust companies can administer a trust over multiple generations, and this is another factor to take into account.