When considering using a Revocable Living Trust for your estate plan, there are several items to consider and talk over with your attorney and family. One that is particularly important is the selection of the person, bank or trust company to manage your trust. You want the person or firm you choose as trustee to manage your trust to be knowledgeable about investing and diversifying the investments to reduce risk while also working within your preferences and directives. Obtaining answers to the following items will help you with your selection:
~ How many other trusts are currently being managed?
~ How much experience in investing does the (or trust company) have?
~ How many millions of assets do they already manage in trust accounts?
~ What stock and bond brokers, banks, insurance agents are employed?
~ How does the potential trustee feel about working on an asset allocation formula for the trust, identifying what percentage should be in stocks versus bonds or certificates of deposit, using advice from your CPA? Any asset allocation formula must be flexible and identifiable, yet still allow the Trustee to have discretion to cope with different market contingencies and the tax issues in the future.
~ How will fees be kept low? All too often, high fee mutual funds are purchased and the client pays the trustee’s management fee plus the mutual fund fee.
~ What types of investments might the client prefer or prohibit? Many clients have a risk aversion to certain types of investments.
~ Since individual trustees are not audited like bank corporate trustees are, what firm does the audit or accounting for the trustee candidate?