Trustee for a Massachusetts trust

August 13, 2019 9:55 PM

My wife and I are have decided to set up a trust for one of our nephews, an adult in Massachusetts who has a number of challenges in his life. We're having a problem identifying a bank or other organization that we could name as trustee.

We don't want either of his parents to fill that role, nor an aunt or uncle or cousin. So that leaves a corporate (bank, credit union, whatever) trust department, we think, to be the trustee. The trust won't be funded until we both are deceased, which could well be for several decades, which I suspect greatly complicates things.

The trust isn't huge, but it's not insignificant either ($100,000), and administrative costs aren't the issue. What is the problem is finding a reputable bank trust department, in Massachusetts, that has this kind of expertise, and does this kind of thing for other than those who have large investments with that financial institution.

I've done some Google searches, and little jumped out at me as being relevant. Bank and credit union websites don't seem to want to provide a lot of detail about their trust departments, such as their minimum requirements or their success stories.

So I'd be delighted by specific recommendations, including options I hadn't considered. (A specific law firm?) I'd be happy with suggestions for an approach other than cold-calling a bunch of large banks. And if in fact I'm actually looking for a magical unicorn, I'd appreciate that being pointed out as well.

(Living on the West Coast, while the nephew is in Massachusetts, isn't a plus, but we do travel to that state several times per year, so a face-to-face discussion with a potential trustee isn't an issue. And no, our lawyer doesn't have any suggestions.)

posted by WestCoaster to Law & Government (9 answers total)

In a similar situation with a similar amount of money, we decided to have our executor buy a lifetime annuity for the benefit younger generation. This gives a modest amount of extra money every month or every quarter that they can save or spend. If they spend it unwisely, there will be more money next month and they can make a different choice (or not) On the theory that money is fungible, having a trustee pay for living expenses only frees up money for other things so I don't think the annuity will fund something that wouldn't be possible under the trust. The only difference is that the trust could put the money in a larger expense like a car but that seems a small advantage compared to the much lower costs and simplicity of an annuity.
posted by metahawk at 10:36 PM on August 13, 2019 [2 favorites]

You can contact the Massachusetts Bar Association Lawyer Referral Service, which offers "no cost to utilize LRS, but referrals are made to fee-charging attorneys, who may charge you no more than $25 for the initial half-hour consultation," to help find an attorney who can make recommendations about how to find a reputable trustee, and provide a brief overview about any applicable Massachusetts laws.
posted by Little Dawn at 10:43 PM on August 13, 2019 [1 favorite]

You probably need a lawyer in Mass first, and you want someone local. Where in Mass? Smaller towns can have local banks that might love to do that kind of thing.
posted by vrakatar at 10:44 PM on August 13, 2019

You say that administrative costs are not a concern, but they should be. If a bank's trust department imposes a minimum annual fee of $3,000, that is a big chunk of $100K principal. In my part of the country, the minimum is more like $2,000. This means that the banks are deliberately pricing themselves out of range of trusts with less than $300,000 or so to manage. They want the $10 million trusts. They don't want to deal with $100,000.

I like the annuity alternative.
posted by megatherium at 2:07 AM on August 14, 2019 [2 favorites]

My partner is in a similar situation in Massachusetts with an adult son and some money he'd like to set aside. The son has some mental health challenges. My partner found that his workplace had a lawyer referral service who suggested a few bank/money person situations specifically for holding on to money for someone who needed it but could not manage it on their own. I do not remember their names off of the top of my head, but the local NAMI chapter in Mass might be able to give you some pointers since they get this sort of question all the time. I'll nudge my partner for the names.
posted by jessamyn at 6:59 AM on August 14, 2019

You've received good advice already. Seconding Megatherium, your $100,000 is a very small amount for a trust, especially in future dollars "several decades" from now, and administrative costs, from a bank or other trustee, will eat it up.

Seconding Metahawk, directing your executor/trustee to buy an annuity for your nephew is an elegant solution if you feel the need to come up with a concrete plan now, so far in advance.

You haven't really told us the purpose of this future gift to your nephew. For future education? So he can do some traveling? To help with his general health and welfare? Are you trying to place a trustee in the middle to prevent the money from going toward certain uses?

I would say that since you are in good health and the gift may not happen, again, for "several decades," no one knows what kinds of radical changes may occur between then and now for your nephew, or for you, and the $100,000 may not even exist any more.

I would suggest that, working together with your estate lawyer, you draft your will or living trust to direct your future executor/trustee to hold the money in trust for the nephew, with the usual paragraphs suggesting permissible uses of the money, including possibly buying an annuity, in their discretion.
posted by JimN2TAW at 7:37 AM on August 14, 2019

Response by poster: The annuity approach does sound like it has a lot of advantages; I'll discuss that with my wife.

I avoided giving details about my nephew because I didn't think it was necessary, and for privacy purposes. I will say that he has (inherited) issues with his health, with addiction, and with the law as the result of his health and his addiction. But he's not served any time in jail (that I know of), and he is able to do some kinds of work, so the gift is really for general health and welfare. I am fairly certain that a lump sum payment would be a disaster.

I'm familiar with the joke about someone who claims, desperately, that he can teach the king's horse to sing within a year - so yes, nothing is predictable. But I think the odds are quite good that the $100,000 will be there when my wife and I have both died; if that takes a while, we can always up the number to adjust for inflation.

I'll also check to see if our (implicit) assumption is correct that we need the trustee to be in Massachusetts, where our nephew is. That's something that I thought our lawyer said, but perhaps he was referring only to the drafting of the trust, not where its executor needed to be.
posted by WestCoaster at 4:53 PM on August 14, 2019

See if he would he eligible for an ABLE account.
posted by SyraCarol at 10:12 PM on August 14, 2019

I know an extremely nice human who happens to be an executive at US Alliance credit union, which has some Mass branches. If you don't find a satisfactory answer, I'm happy to send him a link to this question and ask if he has any suggestions. MeMail me if this would be helpful.
posted by nosila at 12:14 PM on August 17, 2019