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When creating a trust, how many trustees can you have?
Trusts are estate planning tools that can be used to manage how a person's property is distributed after death, without going through probate. Trustees play an important role in protecting the beneficiary's (or beneficiaries') interests.
So how many trustees should you have? To understand the answer to that question, you'll want to have a better understanding of a trustee's role.
When forming a trust, the property owner transfers legal ownership of assets to a trustee.
A trustee has a fiduciary duty, meaning he or she must act solely in the best interests of the beneficiary (or beneficiaries). If a trustee doesn't live up to this duty, he or she can be held legally accountable. For example, the beneficiaries can get a trustee removed and even sue a trustee if he or she misappropriated assets.
A trustee's duties may include monitoring the trust's investments, making sure paperwork and tax forms are correctly filed, and distributing the property to beneficiaries. In more elaborate trusts that involve hedge funds and other complex investment tools, several trustees are often enlisted to divvy up the duties, reports The Wall Street Journal. For instance, one trustee could be hired to manage the money, another to direct investments, a third to make sure the trust complies with the law, and a fourth to distribute the money to beneficiaries.
While there's no limit to how many trustees one trust can have, it might be beneficial to keep the number low. Here are a few reasons why:
One way to prevent these problems is to name a single trustee -- along with one or more successor trustees if your named trustee can't fulfill his or her duties. But it all depends on the purpose of your trust and how you want your trust to work.
Figuring out how to set up a trust can be confusing, so it's best that you consult with an experienced trust attorney near you.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.