Does Location Matter When Choosing Trustees?
I’m having trouble figuring out if a trust is right for me. I became disabled when I was 49 in 2011 and I just turned 60. My problem is that my two best friends live in Connecticut and Washington, and I’m in Minnesota. I have two other good friends that live near me but I don’t know if I want to put them in charge as our friendships are not as strong/trusting as those with my other two friends and it feels like such a huge burden to put on people. Another question: you said that people should get all of their money to reside in one bank. I have my money in three banks because the FDIC rules say that they only insure up to $250,000.
Those are two good questions. In terms of trustees, I would go with the people you trust most even if they’re across the country. Today with on-line banking and investing and Zoom for communicating, location doesn’t matter as much as it once might have. Trust and confidence matter more.
On the other hand, if you were going to appoint someone to serve as your health care agent, location can be more important because presence at a medical facility can make a big difference.
With respect to several bank accounts, you’re right that only up to $250,000 in each account is federally insured. But I’m not aware of anyone losing their accounts through bank failure since the Great Depression. Even during the savings and loan crisis the government stepped in. So, while there’s less risk if you spread your accounts around to several banks, I think that’s outweighed by the convenience of holding your trust at a single bank or investment company. In fact, you can have the best of both worlds. Even if you have your funds housed at a place like Fidelity or Vanguard, you can still purchase bank certificates of deposit through the account and receive the insurance protection.