Navigating challenging family dynamics when choosing a trustee.

The television series Succession had many glued to their seats this year, especially with its compelling finale. While the series is fictional, the family dynamics and quarrelling may sound all too familiar for some. Different personalities can create friction in families, and it’s essential to keep these considerations in mind when putting together your estate plan. You may need to name a successor trustee for your trust, but sometimes family relationships can complicate your decision. Regardless of whom you choose, consider these helpful tips when navigating complicated family dynamics.

The role of a trustee.

A trustee is a person or firm that holds and administers property and assets for the benefit of one or more third parties. It’s important to understand that a trustee is different than an executor or beneficiary. Trusts are legal entities that can be established to ensure that your assets will be distributed according to your wishes. They can save time, keep the administration of your affairs a private matter between the trustee(s) and beneficiaries, and may reduce inheritance or estate taxes. A trust can help alleviate the need for probate, where determination of asset distribution is handled through the courts. Corporate trustees may ease family friction because the trustee can be more impartial than family members and has a fiduciary duty to follow the directions outlined in the trust, regardless of family dynamics. It’s essential to wisely choose successor trustees to step in when you can no longer serve as your own trustee as a result of incapacity or death.

What to consider when choosing a trustee.

Naming a successor trustee should not be taken lightly. Depending on the type of trust that works best for your situation, a trustee will be in charge of overseeing all the trust’s assets. Many choose a close family member or friend — but a lawyer, accountant or trust company are other options.

There are certain traits to look for when picking the ideal trustee. First and foremost you want someone financially astute who understands money. Choose someone who is familiar with basic concepts of investing, and preferably someone who has assets of their own that they are investing with an investment advisor.

Your trustee should be trustworthy — and it’s no surprise most people choose a close family member, such as a child or spouse. You can even name multiple people as co-trustees. If you don’t feel comfortable naming an individual as a trustee, you can also choose to name an entity such as a trust company as sole trustee or as co-trustee with an individual.

“Sometimes children don’t want to be involved in the day-to-day workings, but they want to be the decision makers,” said Patty Steinbach, vice president, wealth management consultant for Commerce Trust.

“Talk to your children, or whomever it is you’re considering naming, and ask if they want to serve. Then ask if they want to do it alone or with a trust company. There is liability involved, and sometimes people have good intentions but are not knowledgeable about how to be a trustee. They may make mistakes because they just don’t know.”

If you do choose to name a bank or other financial institution as part of your estate plan, keep in mind that they’ll follow the terms of your trust as outlined in the document.

“There is a huge misconception that if you have a bank as a trustee, the trust officers are in charge and will act independently when making decisions,” Steinbach said. “That’s just not the case. As trustee, the trust company, whether acting as sole trustee or partnering with an individual co-trustee, will not make the rules, but will follow the written trust document.”

How to manage complicated family dynamics.

Even successful families experience conflict, especially when money is concerned. Sibling rivalries, blended families, spendthrift heirs and bad influences are all common situations that can complicate your estate planning.

Matching your estate plan with your family’s needs requires a delicate balance of financial, emotional and psychological considerations.

“Most importantly you must know your children and understand how they’ll use the money they inherit,” Steinbach said. “I’ve seen people plan differently for different children. Some people choose to keep their money in a trust for their children’s lifetimes. Distributions can be made for health, maintenance, education, welfare, and support, but the children don’t have unlimited access or control of the money.”

It is alright to not want your children to have full access to funds. A trust can provide them certain amounts at certain times, and/or provide that the assets may be distributed to them for certain reasons. It’s also common to not want spouses of children to have access to your assets.

“One of the things that trust companies do well is talking with the next generation and explaining that your parents put the trust in place to protect you,” Steinbach said.

Be upfront about your wishes.

Don’t try to sweep it under the rug — communicating your wishes with your loved ones is key.

Regardless of what you choose, being up front about your wishes is essential.

“Transparency is huge,” Steinbach said.

“However, often people don’t want to tell their children what their assets are or what they will inherit someday. Sometimes it helps to speak to your attorney about writing a letter to accompany your documents that will explain your wishes if you don’t want to do so while you’re alive.”

Situations can become even more complicated with blended families, or with families of special needs children. Don’t be afraid to explain to your loved ones who you’re naming as successor trustee and why. Welcome and embrace their input. You want them to be able to ask questions. Then everyone can be on the same page and minimize any potential conflicts down the road.

“I’m a firm believer in bringing all your advisors together when you’re outlining your plan because each professional looks at it from a different point of view,” Steinbach said.

As part of your Premier membership, your CommercePremier Banker can play a pivotal role by helping connect you with trusted estate planning professionals.