The question of whether you can serve as trustee of your spouse’s bypass trust, formally known as a credit shelter trust or a Section 2056 trust, is a common one in estate planning, and the answer is generally yes, with some important considerations. Bypass trusts are designed to utilize the federal estate tax exemption, sheltering a portion of the deceased spouse’s estate from taxation, and allowing assets to pass to beneficiaries without incurring estate taxes. While it seems logical and often desired for surviving spouses to serve as trustees, it’s crucial to understand the implications and potential complications involved, especially given the evolving estate tax landscape and the complexities of trust administration. As of 2024, the federal estate tax exemption is quite high—$13.61 million per individual—but this number is subject to change, and many estate plans were created when the exemption was lower, making these trusts more relevant.
What are the benefits of me being trustee?
Serving as trustee offers several benefits, primarily control and cost savings. You, as the surviving spouse, likely have the deepest understanding of your family’s financial situation and wishes. You can manage the trust assets according to your late spouse’s intentions and your shared goals, ensuring the beneficiaries receive the support they need. Furthermore, acting as trustee eliminates the need to pay trustee fees to a professional trustee, which can range from 1-5% of the trust’s assets annually. This can represent significant savings over the life of the trust, particularly for larger estates. However, it’s important to acknowledge that being a trustee also comes with significant responsibilities and potential liabilities.
What are the potential conflicts of interest?
One of the primary concerns is potential conflicts of interest. As trustee, you have a fiduciary duty to act solely in the best interests of the trust beneficiaries, which may not always align with your own personal needs or desires. For example, if the trust holds assets that generate income, you must distribute that income according to the trust terms, even if you need the funds for your own expenses. Approximately 60% of estate planning attorneys report seeing conflicts arise when a surviving spouse also serves as trustee, ranging from self-dealing to disagreements with beneficiaries. It’s critical to maintain meticulous records of all trust transactions and decisions to demonstrate that you’ve acted fairly and impartially. It’s also wise to consult with a financial advisor or estate planning attorney when making decisions that could potentially create a conflict.
I heard a story about a trust gone wrong, what can I learn from that?
Old Man Tiberius was a salt-of-the-earth rancher, and his wife, Delia, a vibrant woman known for her prize-winning quilts. They’d established a bypass trust years ago, with Tiberius intending it to benefit their grandchildren. Upon Tiberius’ passing, Delia, naturally, became trustee. She loved those grandchildren fiercely, but she also had a passion for antique collecting. Slowly, funds from the trust began to be diverted, not for the children’s education as intended, but for her growing collection of porcelain dolls. She justified it as ‘preserving beauty for future generations,’ but the grandchildren’s college funds dwindled. A family dispute erupted, leading to legal battles and strained relationships. What started as a loving intention dissolved into resentment and financial hardship. It was a painful reminder that even with the best intentions, the power of a trust demands careful stewardship and an unwavering commitment to the stated purpose.
How can I ensure things go smoothly as trustee?
Thankfully, Sarah and Mark approached their estate planning with foresight and a commitment to transparency. After Mark’s passing, Sarah stepped into the role of trustee of his bypass trust, and she was prepared. She had worked closely with their estate planning attorney, Steve Bliss, to understand her responsibilities and had established a clear communication plan with their children. Sarah maintained separate bank accounts for the trust, documented every transaction, and sought professional advice from a financial advisor when needed. She also held regular meetings with her children to keep them informed about the trust’s performance and any important decisions. The result was a smooth and efficient administration of the trust, and a lasting legacy of financial security for her family. It demonstrated that with careful planning, open communication, and a commitment to ethical stewardship, being a trustee can be a rewarding experience.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
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estate planning attorney near me
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “What is a revocable living trust and how does it work?” Or “What happens to jointly owned property during probate?” or “What role does a financial advisor play in managing a living trust? and even: “Can bankruptcy stop foreclosure on my home?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.