One of the most enjoyable parts of being a Harris County estate lawyer is helping clients set up trusts. Knowing that they have the ability to positively impact future generations or even a cause they care about can be a life-changing experience for a person. The fact that estate planning lawyers are a part of it is almost a bonus to the job. There is an area, though, that so many clients forget, and if it goes without being caught, it can cost the trust and heirs a great deal in the future.
Setting up the trust can be a lot of fun. Figuring out how to fund it is deeply satisfying. Naming trustees and heirs is profoundly rewarding. Directing how the funds will be managed is…very often overlooked.
Yes, despite putting so much effort, and even a sense of personal value into setting up the trust, a huge number of people do not think about the importance of how the money will be managed later. If you do not provide guidelines for how the assets of the trust are to be managed, it is quite possible that your family or other heirs will suffer for it.
Here are just a few ways that trust lawyers in Harris County have seen this situation go poorly:
1. Some institution is put in charge of administering the trust, but with little oversight. The financial advisors are given too much freedom to play “fast and loose” with the money, as well as to charge exorbitant fees. This institution and the advisors it hires do not have much concern beyond what they can get out of the trust.
2. A friend or family member is put in charge of the trust with the best of intentions, but unfortunately, he or she does not have the right skill set to manage the funds. This person, though someone you trust, just does not have the knowledge and experience required to make good investments, to minimize tax implications, etc. To make matters worse, if this person’s efforts are not “good enough,” it can anger the other heirs.
3. A “directed trustee” is chosen to look after the trust according to specific instructions from you. These may include professional companies that do nothing but administer trusts. In addition to knowing the organization has experience, you can also provide guidance on the principles that you want followed when it comes to investments and other decisions.
By having your estate planning lawyer include directions for a directed trustee, you can mitigate some of the concerns that come with choosing a family member or giving a financial planner too much leeway to make decisions for the trust. Obviously, you cannot predict how markets will change and what new developments will arise after your death, but you can determine good approaches for now and potentially give your trustee some discretion if and when it is appropriate. Again, a Harris County trust lawyer will be instrumental in creating the language needed to guide the directed trustee and others involved with the trust.