Should I Use a Professional Advisor as My Trustee?

Warner Norcross + Judd

Warner Norcross + Judd

Selecting the person or institution who will act as your trustee is one of the most important decisions you and your family members will make.

For the task of managing your trust, it is natural to want to choose a family member or someone who knows you and your family well. However, it may make sense for you to choose a professional advisor, such as an attorney, accountant or investment professional to perform this work.

Benefits of Using a Professional Advisor as a Trustee

A professional advisor could embody the good qualities of a family members while also providing more professionalism, as they:

  • May know the family and be well-acquainted with your intent and goals for the trust.
  • Will enhance family privacy by limiting the number of individuals involved in the family’s financial affairs.
  • May be more likely than family members to have experience, skills, systems and procedures in place to administer a trust (although that is not guaranteed for all professional advisors).
  • May be objective and better trusted by the beneficiaries.

Drawbacks of Using a Professional Advisor as a Trustee

Unfortunately, not all professional advisors are well suited to be your fiduciary:

  • Some advisors may lack expertise or resources to serve as a fiduciary.
  • Some firms prohibit employees from serving as fiduciaries, as conflicts of interest could arise between an advisor’s role as a fiduciary and the advisor’s role as an investment, accounting or legal professional.
  • Not all family members may trust or respect the advisor, especially one that was chosen by the previous generation, and the advisor’s power over the trust assets may cause nervousness or resentment in the family.

And, just like using a family member as a trustee, an advisor will eventually retire, pass away or could become sick or incapacitated, thereby necessitating the appointment of successors.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Warner Norcross + Judd | Attorney Advertising

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