Q&A: U.S. is best when picking a trustee

Dear Liz: My wife and I have a revocable living trust and we would like to change our primary successor trustee to someone who lives in the United Kingdom. The new trustee is not related to us nor is he a U.S. citizen. Can this be done and would our trust then become a foreign trust subject to a lot of U.S. taxes? How can we avoid this becoming a foreign trust?

Answer: Please rethink your plan, and not just for the reason you suggest.

Naming a foreign trustee very well may change the trust to a foreign trust for federal or state tax purposes when you die, said Jennifer Sawday, an estate planning attorney in Long Beach.

But settling an estate is difficult enough when the successor trustee lives nearby. Trying to manage the process from another country could qualify as cruel and unusual punishment.

If you really don’t have someone in the U.S. whom you trust, consider hiring a professional trustee. Some banks offer trust administration or settlement services as well as other fiduciary services, Sawday said. A licensed professional fiduciary could handle this role as well. Your estate planning attorney should be able to give you some referrals.

Hiring someone could cost more than naming a friend or family member, but often the money is well spent, Sawday said, because the professional is familiar with the work and is efficient compared to a layperson who may serve as a trustee once in a lifetime.

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