A trust, defined in simpler terms, is an agreement among parties that governs and holds assets for a beneficiary. A trust is composed of three parties that create, control and benefit from the trust the grantor, trustee and beneficiary, respectively. The grantor (or “trustor” or “settlor”) is the party that grants a trustee control of whatever assets are placed in the trust. A trustee governs and manages these assets and a beneficiary (or beneficiaries) is the party that benefits from the trust agreement. Trusts are useful for managing many types of assets, complex families and unique scenarios.
Sometimes it's a great idea to name a family member or a friend. Sometimes it's not. Remember that it is their fiduciary duty, so they have the legal obligation to act in the best interests of the trust and beneficiary. However, there are other things going on behind the scenes. Are they going to continue to preserve the relationships that they've had before and the existing relationships among the parties? Are they going to play favorites with any beneficiaries? Are there any prior issues among the family members involved? Were there are any legal conflicts before or are there going to be any down the road that that could come up? Do they expect to be paid? This is all tough to discuss as a family but trustees often have the right and need to be paid for all the work they do. Are they going to resent doing the job because they are not being paid enough or because the family members are too difficult? Choosing your friends can be difficult as well. Are they honest? Are they patient with your family? Do they know the people involved? Are they flexible and capable of doing all this work? If there's a long administration or there's years of being the trustee of this trust, will they attempt to foster a relationship with the beneficiaries? It might be tough if they never really knew your kids and their involvement is based solely on their foundation and history with you. In short choose wisely!