It’s time to get your estate planning done — here’s how to do it right

Do you need a professional trustee?

There has been more of a spotlight on legacy planning and the need to get our estate plans in order during the last year. Along with the prospect of a lower estate tax exemption and an aging baby boomer population, 2021 is the perfect time to focus on estate planning and on making sure important documents are up-to-date.

Since the current elevated estate credit is set to expire in 2025, many people were already anticipating the need for a trust before the pandemic began. This year brought an urgency to people’s focus on making sure their financial and legal affairs are in order in case of an illness or death.

Trusts help to bring peace of mind, allowing probate to be avoided and for people to control where their assets go after they have passed. Trusts also serve to protect assets, inhibit spendthrift tendencies, maintain privacy, and reduce estate and gift taxes.

A key part of establishing a trust is deciding who will be the personal trustee. The individual chosen for this duty will need to manage both the technical and administrative aspects of being the personal trustee, as well as the impact it may have on family harmony and balance. For example, if an adult child is named trustee of their parents’ estate but doesn’t get along with one of their other siblings, this can have a negative impact on an already strained family dynamic. At times, people chosen to be trustees find their responsibilities so daunting that they ask if there are other options.

It’s critical that anyone named as a personal trustee understands and agrees to the responsibilities of the role and is able to walk into this role with eyes wide open.

From administrative duties to investment oversight: the many responsibilities of a personal trustee

Serving as a trustee is not just an honor – it is a serious commitment. Responsibilities of this role include investing, paying bills, tax reporting, fulfilling obligations to current and future beneficiaries, and following strict compliance requirements. These requirements can be overwhelming for someone who is not experienced in these areas. The position can also come with some risk as it may leave them exposed to legal action by beneficiaries, particularly with larger estates.

To ease the burden faced by a personal trustee, it is worth considering appointing a professional trustee (especially for those with large or complex estates). A professional trustee assumes the responsibility of many of the administrative and record keeping tasks as well as the fiduciary and legal obligations. The trustee ensures that the assets in the trust are managed and administered properly, including the necessary reporting requirements.

There is also the option of appointing a professional trustee to act as a co-trustee. This shifts most of the trustee’s legal liability away from the personal trustee but still keeps them involved in the big decisions.

If you choose a trusted love one for this role instead of a professional trustee, it’s incredibly important to prepare that person for these responsibilities and make sure that person is fully aware of your wishes as well as the duties and risks they will be taking on as personal trustee.

Directing important decisions

Once you decide to fund a trust as part of your estate planning, the question of who to choose as your trustee becomes critical. Preparing your personal trustee or choosing a professional trustee or co-trustee ensures that your wishes will be carried out as you intend and helps to protect your loved ones from unnecessary stress and difficulty in the future.

For assistance regarding trusts or for help creating or updating your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.