Why it might be best to have nonrelatives as trustees 

When setting up your estate plan, if it includes a trust, the trustee must manage the capital and handle the fund’s disbursements to your heirs. Naturally, you want to put someone in place whom you trust implicitly. It only makes sense that your first pick might be another relative or heir.

This could be a major flaw in your estate plan if you appoint a relative. Read on to understand why related trustees can be problematic.

It can disrupt familial relationships 

Suppose you plan to leave assets in trust for your grandchildren and name their father as trustee. This can set up an awkward dynamic between parent and child or among siblings if one is the trustee of another’s funds. The beneficiaries may come to resent the trustee and the transactional aspects this role engenders in what may have previously been close and convivial relationships.

It doesn’t take many conflicts to start a family rumble over estate management issues and access to funds. If these relationships are important to you, ensure that you preserve them while drafting your estate plan.

Alternatives and options

Instead of naming a relative to oversee the financial affairs of your future beneficiary, consider appointing a professional to manage the trust, its disbursements and investment strategies. A far better choice is to appoint as trustee an estate planning attorney, a financial adviser or an unrelated party with no financial or other interest in the matter.

However, these services are not free, and unlike a trustee with ties to the family who might agree to serve in that capacity without compensation, these trustees do expect timely payments for services rendered. You can earmark funds for these expenses, too, when creating the best estate plan to address all contingencies.