Shawn Anderson: There are certain jobs that come with a lot of responsibilities but very little training and one of those is being a trustee on a family trust, even the most financially adept among us may not be aware of all the trustee duties especially if the estate is large.
Hillary Howard: Joining us live to sort through the questions trustees should ask is Dawn Doebler, co-founder of Her Wealth and Senior Wealth Advisor at The Colony Group, great to see you.
Dawn Doebler: Good to see you Hillary!
Hillary: If there are a lot of people for whom this type of thing is just gobbledygook right, they don't know the difference between a will and a trust, can you explain the differences here between being a trustee and perhaps an executor of a will?
Dawn: Sure, good question, an executor is usually someone who helps settle an estate, so someone has passed away and the executor is acting to settle the estate and divide up the assets and certainly a trustee can act in that capacity but more often a trustee is actually managing assets for someone who is alive. It could be, young children a special needs trust, more often it may be children managing a trust for aging parents, so the difference really is an executor is dividing assets of someone who's passed, trustees are managing assets currently being used.
Shawn: Now being a trustee is a huge responsibility so when someone is asked to be a trustee, what do you recommend they do first?
Dawn: Well certainly many of our Her Wealth clients are either trustees or beneficiaries of a trust, so we do have this conversation often, so some suggestions.
1. First of all, read the trust document, that will tell you the goals of the trust and the rules for managing the trust.
2. Second of all, meet with the other trustees if they've been serving for a long time and you are a new trustee, they can really help give you some history on the trust and some of the challenges they may be facing managing the assets.
3. And thirdly meet with other advisors, on many trusts you usually have an investment advisor, an attorney and/ or a CPA and you're responsible as a trustee for overseeing, the activities of these professionals so you want to meet with them, ask your questions, make sure that you're comfortable with them serving as your advisor.
Hillary: What are some of the challenges that trustees run into and how would they overcome them?
Dawn: Well actually Hillary, this article was inspired by one of our younger clients and some of the challenges that she was facing as being a trustee. So, first of all she was taking over as trustee for her mother who had passed away and she was a young woman, the co-trustee happened to be her uncle, who 40 years older than her, so one of the challenges is, really proving yourself as a capable trustee if you're new to the party especially if you're serving with someone in your family who may be substantially older than you.
Secondly, even though she was a beneficiary of the trust and had been for many years she had no information on the trust, it had been running for a long time, as she had been set up by her great grandfather. So she needed to get information about the trust, she had the trust documents and read those but it had complicated assets, there was real estate and investments that she really didn't understand, so we were the advisors and gave her statements and had to go through the nature of the assets and that's one of the challenges, is understanding why do you have the assets that you have in the trust, why is it invested that way, what's the asset allocation and what are the requirements of the assets for the trust.
And then thirdly, she was being asked questions by her family members who are her peers and that's often the case if there's a new trustee they can be ask questions and they may not want to divulge information. So in that case we suggest that they speak to the attorney who's been working with the trust for advice on what they can discuss and what they should keep private.
Shawn: Alright, very good stuff, thank you so much Dawn. Dawn Doebler is with Her Wealth and Senior Wealth Advisor at The Colony Group, you can read more about this on wtop.com.
Consider this your training manual to get and stay financially fit for life!