Who Should I Select as Trustee of My Trust?Share this post
How To Selecting Someone as Trustee of Your Trust
What is a Trustee and How do you Choose One?
Select as trustee anyone you feel can do the job. But how do you figure that out. Having someone to manage your estate when you are gone is an important decision, and one that should not be taken lightly. Depending on the type of trust you are creating, the trustee will be in charge of overseeing your assets and the assets of your loved ones. Most people choose either a friend or family member, a professional trustee such as a lawyer or an accountant, or a trust company or corporate trustee for this key role. Here are some considerations in making this critical decision.
What traits should you look for in a trustee?
As the name goes, the trustee should be trustworthy. If you cannot trust the individual to hold $100 for you, you should not name him as trustee. If your brother-in-law makes a living day trading, steer clear of him. And if your sister-in-law lives paycheck to paycheck, let’s bypass her, too.
If you choose a family member or friend, he should be financially astute, and good with money. You want someone who is, at a minimum, familiar with basic concepts of investing, and preferably someone who has assets of their own that they are investing with an investment advisor. Your sister does not have to be a financial guru, but she should be smart enough to know that she cannot directly invest the money herself. As trustee, she will hire an investment advisor to invest the trust assets, or work with your current investment advisor.
You can select an individual as a Trustee, such as a close friend or family member; or a professional Trustee can be selected, such as a financial institution or a bank. A good Trustee should be someone who is honest and trustworthy, because they will have a lot of power under your trust document. The person you choose to act as a Trustee should also be financially responsible, because they will be handling the investments for the benefit of your beneficiaries. The Trustee should be someone who can get along and have a good relationship with the beneficiaries of your trust. They should also possess good record-keeping abilities.
Is the Successor Trustee Important?
Yes. It is wise to name not only your immediate successor, but subsequent successor trustees as well. An individual trustee may refuse to accept the position, or may resign from the position due to any number of reasons. The trustee may become disabled or die. Most clients tend to want other family members or close friends to act as successor trustees. But since all individuals eventually pass away, it is good practice to name a bank trust department or other corporate trustee as the final successor trustee on the list. Some clients with very high net worth, or very complex assets, may name an institutional trustee from the very beginning—either as a co-trustee with a trusted family member, or serving as the sole trustee.