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Test the waters before choosing a trustee

If part of your estate plan includes setting up a trust to manage funds for heirs or a business, then you will need to appoint someone to be in charge of that trust when you are gone or unable to handle the duties yourself. While no crystal ball exists to tell you how someone will perform such a job, you can test the waters early with younger family members.

One way to test how someone will handle the responsibility of a trust or wealth-management is to give him or her increasingly larger responsibilities with regard to money. One Forbes contributor recommends setting up a savings account and funding it with small increments. Put someone else in charge of the money, but let him or her know there are expectations. You might say that the funds are for charitable use, to cover the expenses of education or for starting a business.

Once you provide funds and some basic expectations, let the person you selected make decisions and use the money. Ask them to report to you on occasion regarding progress so you can see how they are managing the funds, but don't interfere too much in the process. This is a test so you can see how the person reacts to this responsibility. Over time, you might provide coaching, helping someone learn to deal with such responsibility.

The Forbes contributor notes that advance planning and wading into responsibilities helps younger heirs become better stewards of family wealth. You can combine such planning with legal estate tools, such as trusts, that restrict how money can be used. By preparing heirs and using legal tools, you can protect your legacy and pass on life lessons as well as wealth.

Source: Forbes, "Why Giving Your Heirs A Test Run With Your Money Makes Sense," Brian Luster, accessed Dec. 04, 2015

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