Trust to kids and friends

[Steve Smith]

What is the best way to list your kid (friend) on the trust documents so they get the property (I currently have them as successor beneficiaries).

Is there any advantage of putting them as Trustee?

[Savannah Wallace]

Hi Steve, 

Like Randall stated in his post, there is a difference between a beneficiary and a trustee. A beneficiary is the person or entity who is entitled to receive the assets or income from the trust. In contrast, a trustee is the individual or institution responsible for managing and administering the trust according to the instructions set forth by the trust’s creator. While beneficiaries have the right to benefit from the trust assets, trustees hold legal ownership and have a fiduciary duty to act in the best interests of the beneficiaries.

If your goal is to ensure that the properties you own pass down to your intended heirs, it is essential to list those individuals explicitly as beneficiaries in the trust document. The trust should clearly outline exactly who is to receive which properties and under what conditions, such as age requirements or staggered distributions. Being very specific in your instructions helps prevent confusion or disputes later on and ensures your wishes are followed precisely.

Regarding the idea of naming your children as trustees, there are both advantages and considerations to keep in mind. Having family members serve as trustees can save money by avoiding the fees charged by professional trustees, which are often calculated as a percentage of the trust’s assets. However, because trustees hold significant power and responsibility, it is crucial to clearly define their authority and any limitations within the trust document. Without clear guidelines, there is a risk that a trustee might mismanage the assets or act in a way that favors themselves over other beneficiaries. To mitigate these risks, the trust can include provisions that limit the trustee’s powers, require court approval for major decisions such as selling property, or appoint co-trustees who can provide oversight. Additionally, including clauses that allow for the removal of a trustee if they fail to fulfill their duties can offer further protection.

If you did not already work with an experienced attorney to draft this trust initially, or if it has been a while since it was created, I'd recommend sitting down with local counsel to ensure the trust conforms with your intentions. 



Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.