Wealth Management & Financial Planning

Wealth Management & Financial Planning

Do you need a trustee?

The job description for your trustee should be meticulously outlined in your estate planning documents. Clear direction needs to be provided and contingency issues should be examined and discussed before changes in health occur. Like many, you may have your beneficiaries listed as the trustee in your documents. My decades of experience have proven this to be a mistake many times over.

Estate planning is typically focused on a certain event: Your passing. We all will die but most of us go through a period of mental and/or physical deterioration prior to our demise. This period can be short lived or extended for years. The documents we review from attorneys use gallons of ink on the ultimate issue of death, but often fail to address what happens to you “along the way.”

The trustee can serve individually, in a group, as a successor trustee, or serve with others as co-successor trustee. Regardless, they need to know your wishes and desires. When possible, we suggest partnering individuals with a corporate trustee to provide financial oversight and direction. Also, you will need a corporate trustee listed in case those individuals you named are unwilling or incapable of serving.

The trustee should be able to address three distinctive areas: Accommodating your wishes during life, overseeing financial discretion at all times and ultimately completing your legacy transfer. Each task needs to be articulated, agreed upon and understood by both the grantor (the individual or family putting assets in the trust) and the trustee responsible for fulfilling the requirements.

There are responsibilities of a trustee that require a personal knowledge of the grantors wishes. Individuals often name those closest to themselves (commonly their children), as the successor trustees. Few people will ever know you as well as your children but that doesn’t mean they are qualified to manage your assets and deal with the hard reality of potential mental deterioration. The thought process solves one problem and leaves the other exposed.

During my 32-year career, I have seen children take the car keys from their parents (generally after they should have, but that’s another story). Unless a parent has been placed in care, such as long-term, hospital, or hospice, we have not seen the children, or the other spouse remove financial authority from a compromised loved one. The stories on the nightly news talk about crooks and cons, but my experience reveals the culprit is often ourselves with reduced clarity in our thinking.

The solution is having people who know you and the capacity to make financial decisions working together on your behalf. There needs to be clear communication with all parties on how mental degradation will be handled. Most legal documents leave you either fully in-charge or totally out of the picture. Thus, the “nuclear option” of taking all control away is rarely exercised. There needs to be steps that remove responsibilities along the way, gradually and there should be predetermined and discussed strategies. You are well worth the time.

Joseph A. Clark is a Certified Financial Planner and Managing Partner of The Financial Enhancement Group, an SEC Registered Investment Advisor. Joe can be reached at yourlifeafterwork.com or 800-928-4001. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated.

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