March 24, 2025 • 21 mins
Todd Whatley continues his trust-focused discussion by exploring the critical yet often overlooked process of trustee selection. He examines why this decision deserves more attention than the typical "oldest child" default approach, emphasizing that being a trustee is a demanding job requiring specific qualifications.
• Trustee responsibilities include managing assets, ensuring compliance with trust terms, distributing assets fairly, and handling administrative tasks
• Commercial trustees provide expertise and impartiality, often worth their fee to prevent family conflicts
• Key qualities in an effective trustee include financial acumen, organizational skills, integrity, and communication ability
• Common mistakes include selecting family members without proper qualifications or choosing unavailable/uninvolved trustees
• Co-trustees can provide shared responsibility and checks and balances but may create conflict and slow decision-making
• Special circumstances like special needs trusts, charitable trusts, and trusts with vulnerable beneficiaries require specialized trustee knowledge
• Trustee challenges include beneficiary disputes, trustee burnout, and balancing the interests of different beneficiaries
• Attorneys should provide education and resources to help trustees understand their responsibilities
If you want to learn more about elder law coaching or have questions, visit theelderlawcoach.com to schedule a conversation with Todd.
Check out our new website www.TheElderLawCoach.com.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:19):
Thank you.
Specialized experience, Whetheryou're an established attorney
looking to refine your expertiseor an emerging lawyer seeking a
successful foray into elder law, this is your masterclass.
Now let's get started with theluminary in the field.
Here's Todd Whatley.
Speaker 2 (00:38):
That's right.
This is the Elder Law Coach andmy name is Todd Whatley.
As always, I'm extremelyappreciative that you joined me
today and I am continuing todaymy little rant on trust.
I think in my practice I haveseen a lot of these issues come
up and questions that I've hadto answer, issues that I've had
to address.
I thought, well, if I'm dealingwith it, I'm pretty sure my
(01:00):
coaching clients and other elderlaw attorneys out there are
dealing with it, so let's talkabout it.
Okay, today I want to talkabout trustee selection.
I think we don't spend enoughtime on this.
Sometimes we're like, hey, whodo you want to be the trustee?
The oldest daughter, she's fine.
Yeah, okay, next, no, I thinkwe need to let our clients
(01:21):
understand the importance ofthis, and if you do trust in
administration, you understandthe trustee does a lot of stuff
and it's a job, and so I want togo through this as a way to
help you think about this andalso bring it up in your client
meetings, so hopefully you canavoid some of these issues and
(01:43):
help your clients make gooddecisions.
Again, kind of like I talkedabout in the last episode is
that there is a lot of pressureon the public to do trust by
non-attorneys.
Either do it yourself or do itthrough your financial advisor
or even your CPA sometimes.
Your CPA sometimes and I thinkpeople aren't getting good
(02:08):
advice and we have to show whywe are the experts and why
people need to use us to do atrust as opposed to a
non-attorney.
Okay, so, number one when we'rethinking about the trustee,
let's just review quickly whatis the role of the trustee.
Number one they have to managethe trust assets.
They also, particularly afterthe grantor dies and the
successor trustee comes in, ahuge role of the trustee is
(02:30):
ensuring compliance with thetrust terms.
They have to do what the trustsays or else they get sued.
They have to distribute theassets to the beneficiaries.
They have to do it fairly, theyhave to do it correctly, they
have to get the best value and,particularly in a contested
environment, if there is afamily that is fighting, that's
(02:52):
going to be a huge issue, and sothey have to do it correctly.
And they have to handleadministrative things like taxes
and record keeping andinsurance, just keeping
everything up to date, not justestate taxes or income taxes,
but taxes on personal propertytaxes, real estate taxes, things
(03:14):
like that it's a job.
Okay, it is a full-time job andI will tell you throughout this
.
I am starting to recommendcommercial trustees very often
in these situations because it'sa job.
And you know, one thing thatI've started telling my clients
is give your children the giftof a commercial trustee.
(03:35):
Yes, it's going to cost somemoney, but let the commercial
trustee step in.
The kids can still go to workand still do everything they
need to do, and the commercialtrustee takes care of everything
.
Okay, if they don't choose acommercial trustee, let's go
through and talk about some ofthe key qualities that will make
a good trustee or an effectivetrustee.
(03:57):
Number one financial acumen theyneed to understand money.
Understanding how to manage andinvest assets prudently is very
important.
Again, there's a fiduciary duty.
They have to do this for thebenefit of the beneficiary, so
that they don't get sued.
Organizational skills they needto keep very detailed records
of everything and stay on top ofdeadlines.
(04:19):
I will tell you.
If you have more questions onthis, please let me know and go
back a few episodes to theTrustworthy podcast.
I've interviewed the CEO ofTrustworthy.
It's a online platform thatpeople can upload everything
that they have all theirinsurance, all their utilities.
(04:40):
Everything goes in here andit's one place you can go and
find it, and that's a great toolfor the trustee to be able to
just step into that role and seeeverything and be able to
manage it, and I supply it forfree to all of our trust clients
.
Ok, and if you want to talkabout that, let me know.
The trustee needs to haveintegrity and trustworthiness.
(05:01):
Absolutely, they need to beabove reproach because there's a
lot of people looking at themand making sure that they are
doing the right thing and theyneed to act in the beneficiary's
best interest, avoidingconflicts of interest, and a lot
of times that's just difficultwhen it's a child.
They're trying to look out forthe best interest, but they're
also looking out for theirs, andit's so easy to violate the
(05:26):
conflicts of interest.
It's like your friends are realestate agents.
You want to use them, but thefamily may not want to.
They may think that you'regetting a sweetheart deal or
that you know the agent's tryingto just sell it quick so they
can get a quick commission,rather than for the best price.
I mean, there's just alwayssomething coming up.
The trustee needs to have verygood communication skills.
(05:47):
All right, being able to do thejob and then communicate the
job.
It's very time consuming.
You need I tell trustees you'vegot to keep your siblings up to
date.
If they have questions, answertheir questions, because we
don't want them getting upset,we don't want them thinking that
you're doing something wrongand this whole thing ends up in
court.
Communication is key to that.
(06:07):
Keeping them up to speed,letting them know what you're
doing, being very transparent iscrucial.
All right, mistakes what aresome of the mistakes that we
make when we choose a trustee?
Many times we choose familymembers without the proper
qualifications.
It wears me out how thisgeneration that I'm working with
, the older generation, is likeoh, the oldest son is the one
(06:31):
that's supposed to do this.
Well, maybe, or maybe not,maybe they're not the best one
with money.
Maybe the second child's adaughter and she's really good
with money and she should dothis.
The right person.
Pick the person who's bestthrough all those things I just
talked about.
Financial acumen that is veryorganized, has integrity.
(06:52):
Pick the person that is best.
Ultimately, pick a commercialtrustee.
Finally, I get to that, if theystruggle with it any at all,
it's like pick a commercialtrustee Advice at all.
It's like pick a commercialtrustee Advice consider whether
a family member has the capacityto act objectively and
competently and has the time todo it.
Okay, you've got to pick theright person.
(07:14):
If there's one kid works allthe time and it's just busy all
the time, but another kid isretired, maybe the retired one
is the best one because theyhave more time to do it.
This is going to be timeconsuming.
All right, I've seen peoplesometimes pick the uninvolved or
unavailable trustee.
How many times have you beenworking with clients and I've
(07:34):
seen this so many times thatthere's a child local and
there's a child that's away, andso this goes one end of the
spectrum or the other.
Rarely is it in the middle.
So sometimes you'll see thechild who's here is the one who
is involved, is the one who'syou know, making sure mom and
dad are fed, and you know, andthey're the, the golden child,
(07:58):
and the child who never comes tovisit is the child that is
shunned.
But I have also seen the exactopposite.
I've seen where the local childis the.
You know they're nosy.
They're messing up their life.
They told me I shouldn't drive.
They're trying to look at mybank accounts all the time
they're stealing money out of myaccount, which they're not.
And the child that is local isthe one that gets the hatred.
(08:23):
And that other child who nevercomes to visit, oh, they're the
golden child, because every timethey show up everybody takes
off that that child is there allthe time.
Oh, dad, I'm so glad to see you.
What can I do for you?
And you know, they're just thegolden child when they show up
twice a year.
And the other child child isthe one busting their tail
(08:44):
trying to keep mom and dad inthe home and safe and fed.
And all of this they're the badchild.
So sometimes selecting thewrong kid to be the trustee like
picking the kid who is notlocal because they're the golden
child probably is not a goodidea.
Because they're not here, theydon't know what's going on and
(09:05):
you just run into thosesituations.
I recommend in these meetings,discuss availability and
commitment of the trustee.
That is crucial.
You've got to find someone whohas the time available to do it
and who is committed.
Don't pick the disinterestedchild Again.
Every time I can do this, I tryto recommend a commercial
(09:27):
trustee.
The corporate trustees orfiduciary services can provide
expertise and impartiality.
This is just what they'retrained to do.
They have all day to do it.
They are trained, they arelicensed, they are bonded.
This is what they do.
It is going to cost.
A commercial trustee is goingto cost money, but I think their
fee is absolutely worth it.
(09:48):
Okay, they earn their fee.
They keep everything balanced.
They invest money, pay thetaxes, pay the bills I mean
everything's taken care of.
That is their job.
They have staff to do that.
Okay, let's talk aboutco-trustees.
People like I have two kids.
I want both of them to be thetrustees.
Well, the pros of that.
Sure, there's sharedresponsibility.
(10:08):
Okay, if one kid can't do ittoday, the other kid can.
So there are some benefits tobeing co-trustees.
There are checks and balances,making sure both kids are able
to check the bank account, seewhat's going on, be involved in
the sale, be involved in thevaluation.
There are benefits to that andalso sometimes diverse
(10:29):
perspectives help.
Having two people look atsomething from two different
angles can help make sure thatit gets done correctly.
But there are some cons.
The biggest con is thepotential for conflict If they
don't get along, if they seethings differently and they
can't get along and I love thecases it's like, well, my kids
don't talk, but yeah, I willname them as co-trustees.
(10:50):
It's like, really, they don'ttalk to each other, they don't
like each other.
You know, something is therethat's causing them to not talk
to each other.
If you want to tie themtogether to carry this out, it's
like, absolutely, you reallyneed a corporate trustee.
It can be a slower decisionprocess if you have two of them
(11:10):
to have both of them involved.
Almost always if I am wrangledand said I want co-trustees, yes
, ma'am, I will do co-trustees.
I will give them independentauthority to act, requiring two
signatures on everything.
Number one the bank is notgoing to open an account that
requires two signatures, becausethat means if they let a check
(11:31):
come through with only onesignature, they're going to be
held liable.
And banks do not look at checksanymore.
They don't review those to seeif the required signatures are
on there and the person takingthe check doesn't know there
needs to be two signatures.
And so I'll just tell you justfrom a practical standpoint
banks will not accept account.
They will not open an accountthat requires two signatures on
(11:54):
the check.
So the best thing to do here isI would do a corporate trustee
or one trustee and then theother, not co-trustees.
Now, sometimes there arespecialized trustee roles.
I will do a co-trustee whenthey're like I just want my son
to do it, but he may need somehelp.
Okay, well, let's have acorporate trustee as the
(12:15):
co-trustee.
I do encourage that.
Sometimes people won't fully,won't do just the commercial
trustee, but sometimes they willmake the commercial trustee the
co-trustee and it's not best.
But it's better than commercialtrustee not being involved.
They will make sure that theother trustee gets things done.
But sometimes there arespecialized trustee roles.
Number one special needs trust.
(12:36):
In a special needs trust Ihighly, highly, highly almost
demand that if you do a specialneeds trust, you need a
commercial trustee and acommercial trustee who does
special needs trust.
All right.
Charitable trust those getcomplicated tax wise.
You need to follow the taxrules and you need to really
know what you're doing.
(12:56):
So I will many times say lookwith a charitable remainder
trust, we really do need acommercial trustee to make sure
that they understand charitablelaws and tax laws.
Revocable trust If I am doing aMedicaid asset protection trust
irrevocable trust I will say thegrantor cannot be the trustee.
(13:20):
In Arkansas our Medicaidoffices are very picky and if we
name an irrevocable trust withthe applicant for Medicaid as
the trustee of the trust, theywill almost every time say I
don't care what it says, they'rethe trustee.
They can somehow get money fromthis trust.
So therefore, the trust is acountable resource.
So I tell my clients you can'tbe the trustee for sure and I
(13:44):
really don't recommend that yoube the beneficiary, but that's
another show.
Now the trustee has to care forbeneficiaries.
Okay, that's a very uniquebalancing act, particularly when
there are corpus rules andincome rules.
How do you determine betweenwhat's an increase in corpus and
what is income?
So this requires that thetrustee have to balance the
(14:08):
needs between currentbeneficiaries and future
beneficiaries.
If this is a fairly good sizetrust and the person has set up
income beneficiaries versuscorpus beneficiaries later on,
say, many times, the childrenget the income but the
grandchildren get the corpus,how do you balance between what
(14:31):
is income and what is corpus?
That is difficult and in thatsituation, if we want that split
, you really want a corporatetrustee.
Okay, just because someone'sgoing to get mad, someone's
going to throw a fit, and ifthis is Uncle John doing it,
uncle John's probably going toget sued, okay.
So Be careful with that.
Make sure that they understand.
(14:52):
You have to treat bothbeneficiaries fairly and that
gets very complicated sometimes.
Sometimes the assets will beleft to minors and so you want
to make sure that the moneybenefits the minor, not the
parents, not someone else.
And again, if it's Uncle John,they may be persuaded to pay for
the entire Disney trip, notjust the Disney trip for the
(15:14):
child.
They may pay for the parentsand everybody's trip from the
trust, when really they shouldjust be paying for the minors
portion of the trip.
You see how that conflict canoccur.
Special needs beneficiariesagain, if you don't do it
correctly, the trust can bedeemed to be a countable asset
and that's a problem.
And then sometimes there arevulnerable beneficiaries, like,
(15:38):
sometimes, special needs,sometimes not completely
disabled, but just verysusceptible to here let me give
money to my friend or let me buythis for you.
They don't understand thepurpose of money and they want
to spend lots of money.
So keep that in mind.
Again, communication is key.
Make sure that everybodyunderstands what's going on.
So how do we plan for potentialtrustee challenges?
(16:00):
What about disputes within thebeneficiaries?
What if there is a fightbetween them?
Is the trustee able to dealwith that fight?
Are they the parent of one ofthose children versus a niece or
nephew?
That gets difficult.
That gets allegations ofspecial treatment, of not being
fair.
It just brings up issues ofproblems, and so, therefore,
(16:23):
many times in a trust, therewill be mediation language to
say, hey, if there's a problem,if something comes up, this is
going to mediation rather thanjust immediately jumping into it
.
Sometimes trustees burn out.
Sometimes they're just I can'tdo this anymore, but mom's
selecting me, I've got to keepdoing that and they're just
burned out.
They don't keep track like theyshould.
They're just starting to getburned out.
(16:44):
If you hired a commercialtrustee, either they suck it up
and do it, or they bring in anassociate to be the trustee and
they back out and let a newperson do it.
Okay, so that's you know you.
You have to keep that in mind,particularly for these trusts
that are going to last for years, to generations.
You need a trustee that can doit for the duration.
(17:06):
Okay, all right, tools andresources.
I think we, as attorneys, havesome duty to educate the
trustees as to what their roleis, what they need to do, and so
I encourage the trustee to comein when we sign the trust.
That doesn't always occur.
I've never done this, but I'veheard of attorneys doing trustee
boot camps.
(17:27):
They will do like a publicevent and invite the trustees of
the trust they have drafted andsometimes just as a business
generation tool, they'll say,hey, if you are the trustee or
if you've been named as aeventual trustee of any trust,
not even one that I drew up,come to this event, let's talk
about it and let me teach youhow to become a trustee.
(17:49):
And then, if you're theattorney teaching it, chances
are that's who they're going tocome when the time comes for
them to do it.
So it is a way to get sometrust administration work to
come in from trust that youdidn't do Checklists, guides,
professional advisors.
A lot of the people that I knowthat do serve as commercial
trustees.
(18:10):
They will sometimes do a freeconsult with someone, obviously
with the hope that they'll quit,and let them do it.
But a lot of people I know Itrust and respect that they will
meet with these trustees andsay, okay, let me give you some
pointers.
Here's some things to look outfor, but if you need me in the
future, call me.
Okay, and so it is kind of amarketing tool for them.
(18:32):
I could go on with stories.
You know situations where thishas occurred, but you're an
attorney, you've seen it, youunderstand where this can go
wrong.
But hopefully this podcast hasopened your eyes to some of the
issues and in hope I haveencouraged you to spend a little
more time when you're goingthrough the trust planning,
(18:52):
meeting with the client andyou're like okay, who do you
want to be trustee?
Billy, he's the oldest.
Okay, billy, what if Billycan't do it?
Amanda, great, okay, next.
No, spend some time, stop andsay, okay, let's think about
this, because this is veryimportant and hopefully this
podcast has opened your eyes alittle bit to that importance
and how to deal with it.
(19:13):
And again, as a way to helpbring in more business, because
you're dealing with things thatthe do-it-yourself legal Zoom
trust questionnaire doesn'tcover, and even the financial
advisor or CPA who is farmingthis out.
But getting the client to usethem rather than attorney.
(19:33):
This will differentiate you,show you as the expert and
hopefully get you some people in.
That will help increase yourbusiness.
Okay, as always, I am the ElderLaw Coach.
I would love to teach you howto do this.
If you want to get more intoelder law, I can definitely help
you with that.
I would love to walk youthrough this.
(19:53):
If you have questions, go toour website.
I can definitely help you withthat.
I would love to walk youthrough this.
If you have questions, go toour website, the elder law coach
dot com.
There is a place there that youcan schedule a phone call with
me.
Let's talk about it.
I promise, promise, promise youthat I will not push you into
this.
I've actually told a number ofpeople, particularly here lately
, that are a little, I think,overzealous and I'm like I don't
(20:14):
think you're ready yet.
Okay, do this and this, getthis under your belt, do a few
things here and then call me andlet's talk again in six or
eight months.
Okay, so I am not going to getyou to do this if I don't think
I can get you successful and ifI don't think your practice is
ready.
We'll be very honest.
I can't work with everyone.
(20:34):
I don't want to work witheveryone.
But, yeah, give me a call,let's talk about it, and if I
think we're going to be a goodfit, we'll talk about it.
You'll know it, I'll know itand we can carry on.
Okay, thanks again forlistening.
Please subscribe, please sharethis with someone and I will see
you next time, okay.
Speaker 1 (20:51):
Thank you for joining this episode of the Elder Law
Coach podcast.
For those eager to take theirelder law practice to new
heights and are interested inTodd's acclaimed coaching
program, visitwwwtheelderlawcoachcom.
With Todd Whatley by your side,the journey to becoming an
elder law authority has neverbeen more achievable.
(21:11):
Until next time, keep learning,keep growing and stay
passionate about Elder Law.
Thank you.
Specialized experience, Whetheryou're an established attorney
looking to refine your expertiseor an emerging lawyer seeking a
successful foray into elder law, this is your masterclass.
Now let's get started with theluminary in the field.
Here's Todd Whatley.
Speaker 2 (00:38):
That's right.
This is the Elder Law Coach andmy name is Todd Whatley.
As always, I'm extremelyappreciative that you joined me
today and I am continuing todaymy little rant on trust.
I think in my practice I haveseen a lot of these issues come
up and questions that I've hadto answer, issues that I've had
to address.
I thought, well, if I'm dealingwith it, I'm pretty sure my
(01:00):
coaching clients and other elderlaw attorneys out there are
dealing with it, so let's talkabout it.
Okay, today I want to talkabout trustee selection.
I think we don't spend enoughtime on this.
Sometimes we're like, hey, whodo you want to be the trustee?
The oldest daughter, she's fine.
Yeah, okay, next, no, I thinkwe need to let our clients
(01:21):
understand the importance ofthis, and if you do trust in
administration, you understandthe trustee does a lot of stuff
and it's a job, and so I want togo through this as a way to
help you think about this andalso bring it up in your client
meetings, so hopefully you canavoid some of these issues and
(01:43):
help your clients make gooddecisions.
Again, kind of like I talkedabout in the last episode is
that there is a lot of pressureon the public to do trust by
non-attorneys.
Either do it yourself or do itthrough your financial advisor
or even your CPA sometimes.
Your CPA sometimes and I thinkpeople aren't getting good
(02:08):
advice and we have to show whywe are the experts and why
people need to use us to do atrust as opposed to a
non-attorney.
Okay, so, number one when we'rethinking about the trustee,
let's just review quickly whatis the role of the trustee.
Number one they have to managethe trust assets.
They also, particularly afterthe grantor dies and the
successor trustee comes in, ahuge role of the trustee is
(02:30):
ensuring compliance with thetrust terms.
They have to do what the trustsays or else they get sued.
They have to distribute theassets to the beneficiaries.
They have to do it fairly, theyhave to do it correctly, they
have to get the best value and,particularly in a contested
environment, if there is afamily that is fighting, that's
(02:52):
going to be a huge issue, and sothey have to do it correctly.
And they have to handleadministrative things like taxes
and record keeping andinsurance, just keeping
everything up to date, not justestate taxes or income taxes,
but taxes on personal propertytaxes, real estate taxes, things
(03:14):
like that it's a job.
Okay, it is a full-time job andI will tell you throughout this
.
I am starting to recommendcommercial trustees very often
in these situations because it'sa job.
And you know, one thing thatI've started telling my clients
is give your children the giftof a commercial trustee.
(03:35):
Yes, it's going to cost somemoney, but let the commercial
trustee step in.
The kids can still go to workand still do everything they
need to do, and the commercialtrustee takes care of everything
.
Okay, if they don't choose acommercial trustee, let's go
through and talk about some ofthe key qualities that will make
a good trustee or an effectivetrustee.
(03:57):
Number one financial acumen theyneed to understand money.
Understanding how to manage andinvest assets prudently is very
important.
Again, there's a fiduciary duty.
They have to do this for thebenefit of the beneficiary, so
that they don't get sued.
Organizational skills they needto keep very detailed records
of everything and stay on top ofdeadlines.
(04:19):
I will tell you.
If you have more questions onthis, please let me know and go
back a few episodes to theTrustworthy podcast.
I've interviewed the CEO ofTrustworthy.
It's a online platform thatpeople can upload everything
that they have all theirinsurance, all their utilities.
(04:40):
Everything goes in here andit's one place you can go and
find it, and that's a great toolfor the trustee to be able to
just step into that role and seeeverything and be able to
manage it, and I supply it forfree to all of our trust clients
.
Ok, and if you want to talkabout that, let me know.
The trustee needs to haveintegrity and trustworthiness.
(05:01):
Absolutely, they need to beabove reproach because there's a
lot of people looking at themand making sure that they are
doing the right thing and theyneed to act in the beneficiary's
best interest, avoidingconflicts of interest, and a lot
of times that's just difficultwhen it's a child.
They're trying to look out forthe best interest, but they're
also looking out for theirs, andit's so easy to violate the
(05:26):
conflicts of interest.
It's like your friends are realestate agents.
You want to use them, but thefamily may not want to.
They may think that you'regetting a sweetheart deal or
that you know the agent's tryingto just sell it quick so they
can get a quick commission,rather than for the best price.
I mean, there's just alwayssomething coming up.
The trustee needs to have verygood communication skills.
(05:47):
All right, being able to do thejob and then communicate the
job.
It's very time consuming.
You need I tell trustees you'vegot to keep your siblings up to
date.
If they have questions, answertheir questions, because we
don't want them getting upset,we don't want them thinking that
you're doing something wrongand this whole thing ends up in
court.
Communication is key to that.
(06:07):
Keeping them up to speed,letting them know what you're
doing, being very transparent iscrucial.
All right, mistakes what aresome of the mistakes that we
make when we choose a trustee?
Many times we choose familymembers without the proper
qualifications.
It wears me out how thisgeneration that I'm working with
, the older generation, is likeoh, the oldest son is the one
(06:31):
that's supposed to do this.
Well, maybe, or maybe not,maybe they're not the best one
with money.
Maybe the second child's adaughter and she's really good
with money and she should dothis.
The right person.
Pick the person who's bestthrough all those things I just
talked about.
Financial acumen that is veryorganized, has integrity.
(06:52):
Pick the person that is best.
Ultimately, pick a commercialtrustee.
Finally, I get to that, if theystruggle with it any at all,
it's like pick a commercialtrustee Advice at all.
It's like pick a commercialtrustee Advice consider whether
a family member has the capacityto act objectively and
competently and has the time todo it.
Okay, you've got to pick theright person.
(07:14):
If there's one kid works allthe time and it's just busy all
the time, but another kid isretired, maybe the retired one
is the best one because theyhave more time to do it.
This is going to be timeconsuming.
All right, I've seen peoplesometimes pick the uninvolved or
unavailable trustee.
How many times have you beenworking with clients and I've
(07:34):
seen this so many times thatthere's a child local and
there's a child that's away, andso this goes one end of the
spectrum or the other.
Rarely is it in the middle.
So sometimes you'll see thechild who's here is the one who
is involved, is the one who'syou know, making sure mom and
dad are fed, and you know, andthey're the, the golden child,
(07:58):
and the child who never comes tovisit is the child that is
shunned.
But I have also seen the exactopposite.
I've seen where the local childis the.
You know they're nosy.
They're messing up their life.
They told me I shouldn't drive.
They're trying to look at mybank accounts all the time
they're stealing money out of myaccount, which they're not.
And the child that is local isthe one that gets the hatred.
(08:23):
And that other child who nevercomes to visit, oh, they're the
golden child, because every timethey show up everybody takes
off that that child is there allthe time.
Oh, dad, I'm so glad to see you.
What can I do for you?
And you know, they're just thegolden child when they show up
twice a year.
And the other child child isthe one busting their tail
(08:44):
trying to keep mom and dad inthe home and safe and fed.
And all of this they're the badchild.
So sometimes selecting thewrong kid to be the trustee like
picking the kid who is notlocal because they're the golden
child probably is not a goodidea.
Because they're not here, theydon't know what's going on and
(09:05):
you just run into thosesituations.
I recommend in these meetings,discuss availability and
commitment of the trustee.
That is crucial.
You've got to find someone whohas the time available to do it
and who is committed.
Don't pick the disinterestedchild Again.
Every time I can do this, I tryto recommend a commercial
(09:27):
trustee.
The corporate trustees orfiduciary services can provide
expertise and impartiality.
This is just what they'retrained to do.
They have all day to do it.
They are trained, they arelicensed, they are bonded.
This is what they do.
It is going to cost.
A commercial trustee is goingto cost money, but I think their
fee is absolutely worth it.
(09:48):
Okay, they earn their fee.
They keep everything balanced.
They invest money, pay thetaxes, pay the bills I mean
everything's taken care of.
That is their job.
They have staff to do that.
Okay, let's talk aboutco-trustees.
People like I have two kids.
I want both of them to be thetrustees.
Well, the pros of that.
Sure, there's sharedresponsibility.
(10:08):
Okay, if one kid can't do ittoday, the other kid can.
So there are some benefits tobeing co-trustees.
There are checks and balances,making sure both kids are able
to check the bank account, seewhat's going on, be involved in
the sale, be involved in thevaluation.
There are benefits to that andalso sometimes diverse
(10:29):
perspectives help.
Having two people look atsomething from two different
angles can help make sure thatit gets done correctly.
But there are some cons.
The biggest con is thepotential for conflict If they
don't get along, if they seethings differently and they
can't get along and I love thecases it's like, well, my kids
don't talk, but yeah, I willname them as co-trustees.
(10:50):
It's like, really, they don'ttalk to each other, they don't
like each other.
You know, something is therethat's causing them to not talk
to each other.
If you want to tie themtogether to carry this out, it's
like, absolutely, you reallyneed a corporate trustee.
It can be a slower decisionprocess if you have two of them
(11:10):
to have both of them involved.
Almost always if I am wrangledand said I want co-trustees, yes
, ma'am, I will do co-trustees.
I will give them independentauthority to act, requiring two
signatures on everything.
Number one the bank is notgoing to open an account that
requires two signatures, becausethat means if they let a check
(11:31):
come through with only onesignature, they're going to be
held liable.
And banks do not look at checksanymore.
They don't review those to seeif the required signatures are
on there and the person takingthe check doesn't know there
needs to be two signatures.
And so I'll just tell you justfrom a practical standpoint
banks will not accept account.
They will not open an accountthat requires two signatures on
(11:54):
the check.
So the best thing to do here isI would do a corporate trustee
or one trustee and then theother, not co-trustees.
Now, sometimes there arespecialized trustee roles.
I will do a co-trustee whenthey're like I just want my son
to do it, but he may need somehelp.
Okay, well, let's have acorporate trustee as the
(12:15):
co-trustee.
I do encourage that.
Sometimes people won't fully,won't do just the commercial
trustee, but sometimes they willmake the commercial trustee the
co-trustee and it's not best.
But it's better than commercialtrustee not being involved.
They will make sure that theother trustee gets things done.
But sometimes there arespecialized trustee roles.
Number one special needs trust.
(12:36):
In a special needs trust Ihighly, highly, highly almost
demand that if you do a specialneeds trust, you need a
commercial trustee and acommercial trustee who does
special needs trust.
All right.
Charitable trust those getcomplicated tax wise.
You need to follow the taxrules and you need to really
know what you're doing.
(12:56):
So I will many times say lookwith a charitable remainder
trust, we really do need acommercial trustee to make sure
that they understand charitablelaws and tax laws.
Revocable trust If I am doing aMedicaid asset protection trust
irrevocable trust I will say thegrantor cannot be the trustee.
(13:20):
In Arkansas our Medicaidoffices are very picky and if we
name an irrevocable trust withthe applicant for Medicaid as
the trustee of the trust, theywill almost every time say I
don't care what it says, they'rethe trustee.
They can somehow get money fromthis trust.
So therefore, the trust is acountable resource.
So I tell my clients you can'tbe the trustee for sure and I
(13:44):
really don't recommend that yoube the beneficiary, but that's
another show.
Now the trustee has to care forbeneficiaries.
Okay, that's a very uniquebalancing act, particularly when
there are corpus rules andincome rules.
How do you determine betweenwhat's an increase in corpus and
what is income?
So this requires that thetrustee have to balance the
(14:08):
needs between currentbeneficiaries and future
beneficiaries.
If this is a fairly good sizetrust and the person has set up
income beneficiaries versuscorpus beneficiaries later on,
say, many times, the childrenget the income but the
grandchildren get the corpus,how do you balance between what
(14:31):
is income and what is corpus?
That is difficult and in thatsituation, if we want that split
, you really want a corporatetrustee.
Okay, just because someone'sgoing to get mad, someone's
going to throw a fit, and ifthis is Uncle John doing it,
uncle John's probably going toget sued, okay.
So Be careful with that.
Make sure that they understand.
(14:52):
You have to treat bothbeneficiaries fairly and that
gets very complicated sometimes.
Sometimes the assets will beleft to minors and so you want
to make sure that the moneybenefits the minor, not the
parents, not someone else.
And again, if it's Uncle John,they may be persuaded to pay for
the entire Disney trip, notjust the Disney trip for the
(15:14):
child.
They may pay for the parentsand everybody's trip from the
trust, when really they shouldjust be paying for the minors
portion of the trip.
You see how that conflict canoccur.
Special needs beneficiariesagain, if you don't do it
correctly, the trust can bedeemed to be a countable asset
and that's a problem.
And then sometimes there arevulnerable beneficiaries, like,
(15:38):
sometimes, special needs,sometimes not completely
disabled, but just verysusceptible to here let me give
money to my friend or let me buythis for you.
They don't understand thepurpose of money and they want
to spend lots of money.
So keep that in mind.
Again, communication is key.
Make sure that everybodyunderstands what's going on.
So how do we plan for potentialtrustee challenges?
(16:00):
What about disputes within thebeneficiaries?
What if there is a fightbetween them?
Is the trustee able to dealwith that fight?
Are they the parent of one ofthose children versus a niece or
nephew?
That gets difficult.
That gets allegations ofspecial treatment, of not being
fair.
It just brings up issues ofproblems, and so, therefore,
(16:23):
many times in a trust, therewill be mediation language to
say, hey, if there's a problem,if something comes up, this is
going to mediation rather thanjust immediately jumping into it
.
Sometimes trustees burn out.
Sometimes they're just I can'tdo this anymore, but mom's
selecting me, I've got to keepdoing that and they're just
burned out.
They don't keep track like theyshould.
They're just starting to getburned out.
(16:44):
If you hired a commercialtrustee, either they suck it up
and do it, or they bring in anassociate to be the trustee and
they back out and let a newperson do it.
Okay, so that's you know you.
You have to keep that in mind,particularly for these trusts
that are going to last for years, to generations.
You need a trustee that can doit for the duration.
(17:06):
Okay, all right, tools andresources.
I think we, as attorneys, havesome duty to educate the
trustees as to what their roleis, what they need to do, and so
I encourage the trustee to comein when we sign the trust.
That doesn't always occur.
I've never done this, but I'veheard of attorneys doing trustee
boot camps.
(17:27):
They will do like a publicevent and invite the trustees of
the trust they have drafted andsometimes just as a business
generation tool, they'll say,hey, if you are the trustee or
if you've been named as aeventual trustee of any trust,
not even one that I drew up,come to this event, let's talk
about it and let me teach youhow to become a trustee.
(17:49):
And then, if you're theattorney teaching it, chances
are that's who they're going tocome when the time comes for
them to do it.
So it is a way to get sometrust administration work to
come in from trust that youdidn't do Checklists, guides,
professional advisors.
A lot of the people that I knowthat do serve as commercial
trustees.
(18:10):
They will sometimes do a freeconsult with someone, obviously
with the hope that they'll quit,and let them do it.
But a lot of people I know Itrust and respect that they will
meet with these trustees andsay, okay, let me give you some
pointers.
Here's some things to look outfor, but if you need me in the
future, call me.
Okay, and so it is kind of amarketing tool for them.
(18:32):
I could go on with stories.
You know situations where thishas occurred, but you're an
attorney, you've seen it, youunderstand where this can go
wrong.
But hopefully this podcast hasopened your eyes to some of the
issues and in hope I haveencouraged you to spend a little
more time when you're goingthrough the trust planning,
(18:52):
meeting with the client andyou're like okay, who do you
want to be trustee?
Billy, he's the oldest.
Okay, billy, what if Billycan't do it?
Amanda, great, okay, next.
No, spend some time, stop andsay, okay, let's think about
this, because this is veryimportant and hopefully this
podcast has opened your eyes alittle bit to that importance
and how to deal with it.
(19:13):
And again, as a way to helpbring in more business, because
you're dealing with things thatthe do-it-yourself legal Zoom
trust questionnaire doesn'tcover, and even the financial
advisor or CPA who is farmingthis out.
But getting the client to usethem rather than attorney.
(19:33):
This will differentiate you,show you as the expert and
hopefully get you some people in.
That will help increase yourbusiness.
Okay, as always, I am the ElderLaw Coach.
I would love to teach you howto do this.
If you want to get more intoelder law, I can definitely help
you with that.
I would love to walk youthrough this.
(19:53):
If you have questions, go toour website.
I can definitely help you withthat.
I would love to walk youthrough this.
If you have questions, go toour website, the elder law coach
dot com.
There is a place there that youcan schedule a phone call with
me.
Let's talk about it.
I promise, promise, promise youthat I will not push you into
this.
I've actually told a number ofpeople, particularly here lately
, that are a little, I think,overzealous and I'm like I don't
(20:14):
think you're ready yet.
Okay, do this and this, getthis under your belt, do a few
things here and then call me andlet's talk again in six or
eight months.
Okay, so I am not going to getyou to do this if I don't think
I can get you successful and ifI don't think your practice is
ready.
We'll be very honest.
I can't work with everyone.
(20:34):
I don't want to work witheveryone.
But, yeah, give me a call,let's talk about it, and if I
think we're going to be a goodfit, we'll talk about it.
You'll know it, I'll know itand we can carry on.
Okay, thanks again forlistening.
Please subscribe, please sharethis with someone and I will see
you next time, okay.
Speaker 1 (20:51):
Thank you for joining this episode of the Elder Law
Coach podcast.
For those eager to take theirelder law practice to new
heights and are interested inTodd's acclaimed coaching
program, visitwwwtheelderlawcoachcom.
With Todd Whatley by your side,the journey to becoming an
elder law authority has neverbeen more achievable.
(21:11):
Until next time, keep learning,keep growing and stay
passionate about Elder Law.
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