Anatomy of A Trustee: How to Choose A Good One - Trusts & Estates and Elder Law Newsletter
Choosing a trustee is not just a box to check—it is one of the many important decisions you will have to make when creating an estate plan that includes the creation of a trust. After all, the person you put in charge of overseeing your trust will be responsible for carrying out your wishes, managing assets, and sometimes even navigating tricky family dynamics. The right trustee can make all the difference in ensuring your legacy is handled smoothly and according to your exact instructions. This newsletter will explore some factors you may wish to take into consideration when choosing the best trustee for you, your beneficiaries, and your legacy.
1. Trustworthiness
The trustee must be someone you can rely on to act in the best interests of the beneficiaries and adhere to the terms of the trust. Their integrity and ethical standards are critical.
2. Availability & Willingness
Managing a trust can be time-consuming, so choose someone who is willing and able to take on the responsibility. Consider how much time they can realistically dedicate to the role.
3. Impartiality and Family Dynamics
Ideally, a trustee should be someone who can remain neutral, especially if there are multiple beneficiaries. Conflicts of interest or favoritism can lead to disputes, and, oftentimes, a waste of the very assets you are trying to preserve. If you are considering a family member as a trustee, think about potential dynamics. Family relationships can be complicated, and a trustee who is also a beneficiary may face pressure to make biased decisions. A neutral third party might be more appropriate in some cases.
4. Age & Health
You will want to name a trustee who is likely to be available and capable of fulfilling their duties over time. Avoid naming someone who may be elderly or in poor health.
5. Geographical Location & Tax Implications
A trustee located in the same state or region as the trust may make administration smoother due to familiarity with local laws and regulations. However, if the person you trust happens to be in another state, with a little planning and coordination, that can be a viable option as well. However, be mindful that selecting a trustee in a particular state could trigger unintended income taxes depending on the how the trust is administered. Be sure to speak to an attorney or accountant who can advise you on the tax implications of your trustee selection.
6. Financial Responsibility & Knowledge
Trustees often need to manage complex assets, investments, and legal documents. Choose someone with financial acumen or the ability to hire professionals (like accountants or attorneys) to assist in managing the trust.
7. Experience with Legal and Financial Matters
Depending on the complexity of your estate, you may want a trustee with experience in law, finance, or estate planning. This ensures that the trust will be administered properly.
8. Professional Trustee vs. Individual
Some choose to name a trusted family member or friend as a trustee, while others opt for a professional trustee (such as a bank or trust company). Professionals may charge higher fees but bring expertise and objectivity. However, individuals that understand your circumstances, wishes, and family dynamics might be better suited to address your beneficiary’s needs. Sometimes a co-fiduciary relationship with both a corporate and individual trustee might make sense, depending on your specific circumstances.
9. Backup Trustees
It is essential to name a successor trustee (or multiple backups) in case the primary trustee is unable or unwilling to serve. This ensures continuity in the management of the trust.
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Selecting the right trustee is about more than just trust—it is about ensuring your wishes are respected and your estate is managed with care and competence. Whether it is a family member, friend, or professional, the person you choose will play a pivotal role in securing your legacy. Take the time to consider their capabilities, reliability, and willingness to serve in this critical role. By making a thoughtful decision, you are not just planning for the future, you are ensuring peace of mind for both you and your loved ones.
Having proper guidance from an experienced planning attorney can make all the difference when selecting the right trustee. If you would like assistance, we are happy to help.
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