If you plan to set up a trust in Illinois, you may not know how to choose the trustee. Selecting the right person or company to manage your trust may impact its operations and costs. Moreover, Illinois trustees must take responsibility for executing important duties.
What Exactly Does a Trustee Do?
A trustee has legal control over all the assets that you place in trust. He or she manages these assets for the trust beneficiaries. The beneficiaries have no ability to control the assets unless they receive some of them in a distribution from the trust.
Because a trustee has a lot of power to make decisions for the trust and beneficiaries, he or she must obey a strict legal duty of care. The trustee cannot have conflicts of interest between personal interests and the trust, and he or she cannot favor one beneficiary over another. Every investment decision must be prudent and made in the beneficiaries’ best interest.
Individual Versus Institutional Trustees
There are two main types of trustees: individuals or institutions. You could choose a relative or friend, a trusted advisor such as a lawyer, or a bank/trust company as the trustee of your trust. Each option has different pros and cons.
When you choose an individual, you get the benefit of personal interaction. You can judge for yourself whether the person seems trustworthy and responsible. Also, your trust may be able to pay lower fees to an individual trustee if he or she is a relative or friend. Lawyers, though, may cost more if they act as trustees. Moreover, individual trustees may have to pay professionals (such as accountants) to help handle their responsibilities. Your relatives may not have the financial expertise to manage every task needed by the trust.
When you choose an institution (usually a bank or trust company) to manage your trust, you gain the benefits of experience and breadth. Institutions have resources such as investment departments who can manage balanced portfolios, plus accountants to handle taxes and bookkeeping. Plus, they usually manage many trusts at the same time, so they are familiar with common questions and issues. On the downside, institutional trustees are usually extremely expensive. If your trust assets have a lower value, it might not be worth it to pay the trustee fees. In short, choosing a trustee is a difficult decision with many pros and cons to as to different people you might select.
Want to start setting up an Illinois trust? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.