Hi. Lee Phillips here. I'm an attorney
don't hold that against me
and I want to talk to you a minute about
the considerations that you need to take into account
when you name a trustee.
That's the guy who's going to take over
after you, mom, dad, die
who's going to manage the trust?
and for most people
if you're trying to avoid probate with the trust
the trust is going to be the totality of your estate.
and then
the trust is going to be distributed by
by this successor trustee down to the beneficiaries.
So who do you name as the successor trustee?
If mom and dad are alive
they're going to be joint trustees. That's fine.
Mom dies, dad's going to be the remaining trustee.
He usually controls the whole thing.
But when Dad dies we've got to have somebody else.
We've got to have a successor trustee.
And usually you name one of the kids.
Now in the old days
you always named the bank
and the lawyer may want you to name the bank.
The lawyer and the bank they get together
and they refer clients back and forth to each other.
In the old days the banks used to be First Cheatem and Howe
Bank and Trust Company
And in the 80s they decided that
trusts, that's for rich people.
We don't want to be tag as being only for rich people.
So we're going to drop the "trust"
and now it's just First Cheatem and Howe.
So then I'll have "and trust"
But the banks still are trust companies.
They will act as the successor trustee.
Now that's not a good idea in my opinion
and I've done it several times
when I've written trusts for people
there are appropriate circumstances
but usually
if the family's going to get along,
everybody's going to be happy, we're going to name a kid.
I mean the kid's not a kid kid.
He's a 50, 60 year old man when dad dies.
Or is a 50, 60 year old daughter.
What are the considerations in which kid you pick?
You always pick the oldest one. Well, no.
Not necessarily.
We're going to pick the kid who has decent business sense.
I mean, if the guy is a spendthrift
you don't want your son being the trustee
if he can't keep a dime for 15 minutes
We're going to pick a kid who's local.
They're going to have to interact with the locals.
They're going to have to shut down the bank accounts
they're going to have to rehab the property
get it ready, fixed up, cleaned out, ready to go sell it.
So being local is important in that they interact.
Now could somebody do it from a distance?
Yeah they can do that
and it isn't unusual to have John who's the brilliant businessman
and Joe who's the local.
Great guy. Not very good at business.
But Joe can help be the legs on the ground locally
and be directed by the trustee
so that kind of works too.
So good business guy, local.
Are they fair?
Are they going to get along with the other kids?
That's a consideration too
because this guy is going to have to wrap up mom and dad's affairs.
They're going to have to distribute the estate,
divide it out mom and dad wanted equally to all the kids
so they're going to have to
be able to get along with the kids to some degree.
They're going to have to be transparent.
They have a fiduciary duty to the beneficiaries and so
they need to be able to explain things to the other kids.
So good business guy, local, fair,
what else do we need in a trustee?
Not a lot, in a sense.
Although the better the trustee is at managing things
the better off you are going to be having them be the successor trustee.
They're going to manage all the property
in some cases mom and dad have a lot of real estate.
Why sell the real estate?
The trustee can manage it for decades.
It makes a good cash flow.
He can divide up the profits, the cash flow, with the other kids.
The kid gets income every year
maybe we don't want to liquidate the real estate, get rid of it.
These are the decisions that the trustee will have to make.
And if you sit down with the successor trustee
and kind of explain maybe what you want to do
as long as it's within what the trustee is supposed to be doing
they can follow your directions and then kind of know
what mom dad wanted to happen with their estate.
So the successor trustee is an important choice.
Can you have more than one trustee?
Could we we have all of the kids be trustees?
Well yeah, but you don't get a lot done with a committee.
so maybe John who is out of town and Joe could be joint trustees.
Or Mary, who is absolutely fair will take care of everything
she can and compassionate with the kids
she can be a co-trustee with John who is the great businessman
and so you know you can mix it up that way and have
I wouldn't put more than two as joint trustees.
Yeah, I've written a trust where maybe three were
but I kind of argue against that
just because it's hard to get anything done with a committee.
So pick your trustees
usually you pick somebody in the family
Blood's pretty thick.
yeah I've seen a lot of best friends and stuff
but best friends tend to go away the blood hangs around a long time
This is Lee Phillips talking about
choosing your successor trustee.