Wealth Logic Solutions

SOURCE: Investment Advisor, May 2007 Issue

People often name a friend or relative as a trustee based on that person being “the responsible one.” The friend or family member may even feel honored in being named to serve in this role. It sounds like a perfect arrangement, doesn’t it? But is it? All too often, the answer is “No, it is not appropriate.” Most people have no idea what it really means to be a trustee and how much work it entails. The responsibilities involved are often complex and time-consuming. It may even prove to be overwhelming for those who lack the time, experience, and specialized knowledge required to administer the role properly.

Before naming a trustee, you should be educated on what a trustee is and who is appropriate to assume the role.

What is a trustee? A trustee is a person (or institution) to whom legal title to property is entrusted in order to administer it for a beneficiary.

Who is appropriate to assume the role? When determining a trustee’s overall responsibilities and figuring out who should be a trustee, considerations should go beyond the duties and take into account the relationships among family members.

To do that, ask yourself these five questions:

1. Do you trust this person to be true to your interests? Will this person put your interests ahead of his/her own?

2. Are you focusing more on yourself in the selection process or the potential trustee? Although the choice may feel right to you, is it equally acceptable to the trustee?

3. Will naming this person cause family tension or a rift?

4. How is the health of the chosen trustee?

5. Does it make sense - financially and otherwise - to name an outside professional as a trustee?

Keep in mind, a trustee may need to wear many hats — art dealer, bill collector, investment analyst, bookkeeper, property manager, business executive, tax specialist, secretary, and financial counselor. Depending upon your estate, this could be a full-time job!

One couple found out it pays to consult a financial planner –

By Anne Thompson, Chief environmental correspondent of NBC News

Updated: 10:47 a.m. CT Feb 22, 2007

GAITHERSBURG, Md. - Sixty-five-year-old Julia Cardillo cares for her garden and birds during retirement near Tampa, Fla., with her husband, Paul, after raising two sons.

But 900 miles away, in Gaithersburg, Md., youngest child Matthew worried who would take care of them.

“That whole role reversal thing is difficult,” he says, “because just bringing it up is difficult.”

With nursing home costs averaging $70,000 a year, Matthew’s answer is long-term care insurance — a subject Julia wasn’t eager to talk about until they went to a financial planner.

“That was the apprehension,” she says. “Can I afford this? Can Paul and I afford this?”

Matthew felt she couldn’t afford not to buy it.

“From everything I’ve read, if you wait until you need it tomorrow, it’s generally either unaffordable or unattainable,” he says.

Since Medicare only covers 90 days of nursing home care after you’ve been in the hospital, financial planner Thomas Curtis says most people need some kind of help.

“I like to call long-term care ‘wealth insurance,’” he says.

Curtis says it allows people like Julia to protect their home and other valuable assets.

But this coverage doesn’t come cheap. Yearly premiums can run you from around $1,000 to several thousand dollars depending on your age and the options you chose.

“There are four factors I ask people to address,” says Dr. Marion Somers, a geriatric care manager and author of with ‘Eldercare Made Easier.’ “One is the benefit factor; one is the waiting period factor, the amount factor and inflation.”

And the earlier you buy it, the cheaper it is.

“I recently presented a proposal to a client where the premium was $1,250 a year,” says Curtis. “If you look at that over a 40-year time period, you’ve only paid $50,000.”

And that is far less than what an average yearly stay at a nursing home costs.

But as Julia Cardillo learned, you must budget for it, because if you stop paying the premiums, you lose your coverage.

“This gives options to everybody, including myself,” she says.

And it gives long-distance families peace of mind.