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Choosing a trustee for a charitable remainder trust

On Behalf of | Apr 15, 2020 | Firm News

Most people want to contribute to their communities, whether it’s through volunteer work, donations or support of local charities. Luckily, there are ways to continue the charitable acts through your estate planning process.

One of the main avenues for charitable giving is establishing a charitable remainder trust (CRT), which is a trust that holds a donor’s assets and pays out interest during the donor’s lifetime. After they pass, the remaining balance of assets is distributed to charities.

Similar to most trusts, a CRT requires the donor to choose a trustee who will manage the trust and also provide the donor income during the pay period. It makes it critical to select the right trustee for your circumstances.

Can I act as a trustee myself?

Many donors wonder if it’s possible to manage the trust themselves. In theory, you could name yourself as the trustee of the CRT, but it’s not recommended. One of the most significant advantages of CRTs is the tax advantages and naming yourself would complicate the process. If you decide to manage the trust yourself, it’s critical to have an experienced third party handle the paperwork separately.

Who should I choose as a trustee?

Trustees range from all types of people. You may choose a family member, a friend, an organization or even a company to represent the management of your trust. However, it’s better to rely on professionals for larger or more complex trusts, such as CRTs. It’s best to review all your options and interview multiple candidates for your trust if you have time.

What do I look for in a trustee?

For a CRT trust, you must find a person or organization who has experience or understands the tax implications of the trust. You also will want a trustee who is dependable, organized and who represents your interests first. Also, you will need a trustee who follows directions, which is specified in your charitable remainder trust.

If you want to set up a CRT, it’s best to rely on a support system to help you make the decision – especially since you will not want to make changes to your trust afterward. So take your time and choose the right option for you.