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W W W. M A I N E B I Z . B I Z 35 N OV E M B E R 2 7 , 2 0 1 7 F O C U S B A N K I N G / F I N A N C E T rusts are used for a variety of rea- sons. Whether the goal is to reduce taxes on the transfer of family wealth, ensure the intended disposition of assets for a non-traditional family, or provide for the proper management of assets, trusts can off er meaningful, tailored solutions to meet your objectives. e "success" of a trust will ulti- mately be measured by the trustee's ability to administer the trust in a way that fulfi lls your intentions, while meet- ing the needs of your benefi ciaries. e trustee, therefore, plays a pivotal role in the administration and management of any trust and the question of who should serve as trustee should be given careful consideration. Here are some qualities to look for: 1. Trustworthiness A trustee must be trustworthy. Trusts often hold substantial wealth and may continue beyond your lifetime, perhaps for successive generations. You must be confi dent that your trustee will man- age the trust assets appropriately and administer the trust using the terms you provided as a guide. Most trustee actions will also involve some level of discretion. is means trusting your trustee to say no sometimes, to make diffi cult deci- sions, and to exercise reasoned judgment. 2. Qualifi cations A good trustee needs investment exper- tise, knowledge of the laws that govern trust administration and an understand- ing of the tax rules that apply to the trust and its benefi ciaries. ¡ Investment expertise: Trust com- panies usually invest the assets for which they serve as trustee. Expect that an individual serving as trustee will need to do some due diligence on investment advisors. Any poten- tial trustee or advisor can, and should, share with you past investment per- formance and information on how fees are charged. ¡ Knowledge of law: States may have uniform codes that govern matters such as the trustee's duty to inform and report to benefi ciaries, a trustee's duty to diversify assets, or rules for how additions and distributions from trusts are to be characterized. Issues such as making sure a benefi ciary knows a trust exists, diversifying concentrated positions in closely held business interests, or distinguishing between the interests of current and remainder benefi ciaries all commonly fall within the purview of a trustee. If an individual trustee is not versed in these matters, she should engage another professional that is. ¡ An understanding of taxes: Fiduciary income tax rules are not intuitive and diff erent tax rules may apply to diff erent types of trusts. To further complicate mat- ters, the timing of distributions, or whether distributions are made at all, can have a signifi cant tax impact not only on the trust but also the benefi ciaries. Your trustee may need to work with a tax pro- fessional to advise on tax matters. 3. Impartiality Often an independent, unrelated person or entity is chosen as trustee, but this is not always the case. In some instances a benefi ciary can serve as trustee of her own trust or can serve as trustee of a trust for the benefi t of other family members, including the trustee. Ask yourself, "Will naming this person hurt family relation- ships or cause problems down the line?" While the future is hard to predict, trust your gut. If you can envision problems now, it is best to choose a trustee that is likely to be seen as more impartial. 4. A sense of partnership It is imperative your trustee develop a good working relationship with your benefi ciaries. Expectations should be set from the start that the trustee and benefi ciaries are on the same team. A trustee needs to be both a good listener and a good communicator. To main- tain the trust of your benefi ciaries, and be a true partner, your trustee should be totally transparent. Being a partner also means building a relationship. Be thoughtful to select a person or entity as your trustee that will have the ability, resources and willingness to serve for a duration of time. Choosing wisely when it comes to your trustee will help ensure that your objectives, and the benefi ciaries' needs, will be met. C D M i s a lawyer and director of account administration at Spinnaker Trust in Portland . She can be reached at @. H OW TO WE'VE GOT MAINE* COVERED ALL DAY AND EVERY DAY *with nightly and weekend routes to New Hampshire and Massachusetts with nightly and weekend routes to New Hampshire and Massachusetts WE WANT TO BE YOUR COURIER! FIRST TIME CUSTOMER? 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