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When a corporate trustee is the right choice

Trusts may have a variety of uses for Tennessee residents. They may be designed to allow certain types of assets to appreciate in value tax free before being passed on to beneficiaries. They may allow the grantor to dictate how distributions will be made based on any criteria the grantor wishes to set, such as the beneficiary’s age. Grantors can also use a trust to state their goals.

However, there is one error people commonly make amid all this careful planning, and that is naming a friend or family member as the trustee. At first, this can seem like the perfect solution. The friend or family member is trustworthy and understands the family dynamics. Unfortunately, there is a good chance that person will lack the financial and legal knowledge required to manage a complex trust.

The trustee is liable for making sure the trust and its assets are managed correctly, and people without experience may simply not have the background to do this. Furthermore, being a trustee can be a great deal of work, and thus appointing a loved one as a trustee can be a burden. One option is to appoint a corporate trustee such as a bank. This trustee could work in tandem with the grantor’s financial adviser, who would handle investments.

There are other reasons a person might want to create a trust. Trusts can provide more privacy and get assets to beneficiaries more quickly than a will. However, trusts can also be costly, and for some people, a will might be a better choice. In this case, an executor would need to be appointed. Being an executor is usually less complex than being a trustee and is generally a role that a family member or friend is able to fulfill.

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