Parenting is all about planning. From preschool to college, you carefully orchestrate your children’s lives. Estate planning is a natural extension of that care, and choosing the right trustee—perhaps a professional—is a key element in securing their financial future.
What is a professional trustee?
A professional trustee is an individual or institution that specializes in managing trusts. These experts handle financial responsibilities according to your wishes and legal requirements. Banks, trust companies, and some attorneys serve as professional trustees, bringing specialized knowledge to this important role.
Benefits of choosing a professional trustee
Professional trustees provide several advantages that family members often cannot match:
- Expertise in financial management and investment strategies
- Objectivity when making distributions to beneficiaries
- Knowledge of tax laws and reporting requirements
- Longevity and continuity of service
- Experience with trust administration
New Jersey follows the Uniform Trust Code with some modifications specific to the state. The law allows trustees to make “prudent investor” decisions and requires them to act in the best interests of all beneficiaries. Professional trustees understand these obligations thoroughly and maintain compliance with all reporting requirements.
When family members might be better
Despite the advantages of professional trustees, family members sometimes serve better in this role. They know your values and understand family dynamics. They also typically charge less than professional trustees, who generally collect between 1-2% of trust assets annually as fees.
Making your decision
The right choice depends on your family situation, asset complexity, and personal preferences. Ask yourself these key questions:
- Does anyone in my family have financial expertise?
- Will family dynamics create conflicts?
- How complex are my assets?
- What costs can my estate afford?
Estate planning decisions require careful consideration of legal and financial factors. An experienced New Jersey estate planning attorney can help you evaluate your options and create a plan that protects your family’s future. They will explain how different trustee choices might affect your specific situation and help you make the best decision for your loved ones.