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Choosing a Third-Party Trustee: The Benefits and Advantages from a Chapel Hill Trust Lawyer


When creating a trust, one important decision to make is who will act as the trustee. Choosing to name a non-family third party as the trustee of your trust can provide several benefits. Here, we will explore some of the pros and cons of choosing a third party to oversee the trust.


Pros


Objective Decision Making

A third-party trustee has no personal ties or biases that could affect their decision-making. This means decisions are based on the best interests of the trust and its beneficiaries, rather than any personal feelings that might come into play with family members. In addition, if there is ever disagreement among beneficiaries, it may be easier to mediate if the trustee is unbiased.


Expertise in Financial Matters

A non-family third party, such as an accountant, lawyer, or banker, will have the knowledge and experience needed to handle complex financial transactions that may arise in relation to the trust’s assets. This helps ensure that all parties involved understand the trust’s financial situation and can make informed decisions about how best to manage it for the benefit of all involved.


Professional Oversight

A professional third-party trustee will have oversight from their organization or firm (or from their professional association). This provides added assurance that the trustee is following all applicable laws and regulations when managing your trust assets, which helps protect against potential liability issues down the road. Professional oversight also helps ensure that your trust assets are managed responsibly and effectively throughout the trust’s lifetime.

Cons


Cost

The biggest obstacle to naming a third-party trustee is the cost. The Trustee will charge fees for managing the trust. In general, the more assets under trust, the more the trust can afford professional management. For smaller trusts, this may not be affordable.


Inside Knowledge and Relationships

A third-party trustee does not have the inside knowledge and relationships of family members. While this is usually a good thing, sometimes it can be an advantage for the trustee to be a family member that knows the beneficiaries and their particular needs. A well-respected family member may be able to encourage beneficiaries, especially young ones, to make good choices for themselves.

Is a Third-Party Trustee Right for Your Family?

Naming a non-family third party as trustee of your trust can provide numerous advantages—not only in terms of impartiality and objectivity but also practical considerations such as access to resources and expertise in managing various investments or other financial matters associated with trusts. If you are considering setting up a trust for yourself or a loved one but have concerns about choosing a trustee, the appointment of an independent third party could be worth exploring further.


Contact us to speak to a Chapel Hill trust lawyer at our firm. We will work with you during the planning process to weigh the pros and cons of choosing an independent trustee so that you can ultimately make the best choice for your family. To schedule a consultation, simply call our office at 919-376-2361.

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