Even though many aspects of estate planning are complicated, choosing a trustee is one of the most difficult decisions to make. Many suggest that people should have several trustees, but sometimes choosing even one successor trustee can be a challenging task.

This is true in relationship to living trusts created during life or a trust created in a Will. The trustee, who is responsible for carrying out your wishes when you are gone, needs to be someone that you can trust!

Factors such as family relationships can make that choice difficult and sometimes people don’t think carefully enough about the many components that should influence this decision.

It is important to understand that the trustee will know your most intimate family details. The trustee must be counted on to make thoughtful decisions in light of potentially sensitive family dynamics. The trustee should have a full understanding of their fiduciary duty, be objective and be able and willing to care for your assets with the same attention as they would give their own.

Although there are many factors that go into this decision, our blog focuses on 5 basic things to consider when choosing a trustee.

Choosing a responsible trustee should be the first consideration. Although a  person does not need to have specific expertise to act as a trustee, the person you designate must be responsible and act with common sense. It is crucial to note that a person who is not careful with his or her own affairs will not likely be careful with your affairs.

Responsibility in this sense may include: having good judgment, being diligent and having the common sense to know when the expertise of a third party is necessary. Trustees should be able to recognize that they have a duty to preserve, protect and grow the trust estate while avoiding risks and dangers to the trust estate.

If the trustee is given discretion to make decisions, the trustee must have the ability to be objective, follow instructions and consider the best interests of all of the beneficiaries.

Professional Expertise

Professional expertise is not always needed, but it should be considered and is recommended in many circumstances. When estate tax issues are present, a corporate fiduciary should always be considered, either as the trustee or co-trustee with a family member.

Family dynamics may suggest the need for a corporate trustee or co-trustee. If there are no good individual candidates, a corporate trustee may be your best bet. Corporate trustees (typically banks) will charge for their services and may seem somewhat impersonal; however, using a professional trustee often results in objectivity, longevity, expertise, experience and knowledge.

Age and Availability

Although you may consider an older person to best fulfill this role, they may be busy or in declining health. This reality does not necessarily mean they should not be considered if they truly are the best candidates, but you should consider the possibility that they may not be around or able to act as trustee when the time comes. Many recommend that you remain proactive by naming several successors.

Even if the best candidate is young and in good health, you don’t know what the circumstances will be when the time comes. Naming a corporate trustee as a final back up or giving the successor trustee(s) or beneficiaries the authority to name a corporate trustee is a safe practice.

Co-Trustees

Co-trustees have their place, but co-trustees add a layer of complication and administrative burden to the handling of a trust estate. Unless stated otherwise in the trust document, co-trustees must act in concert (together) to approve anything and to take any action. There are some instances in which co-trustees are quite beneficial. Naming a trusted family member as co-trustee with a corporate fiduciary may be good combination of personal decision-making with professional investment; however, all instances are unique.

Naming two or more family members can spread out the burden and responsibility. Co-trustees can ensure that decisions will be made with various input. Alternatively, co-trustees who do not get along can result in fighting. The decision on whether to name co-trustees should be made with the goal of avoiding conflicts and easing the administrative burden.

Naming co-trustees should be done with a good understanding of the skills and abilities, personalities and relationships and likely advantages and disadvantages of trustees acting together. Naming co-trustees when it is does not make total sense can result in the estate administration being more difficult than it needs to be.

Re-evaluation

Decisions must be made in the present, but those decisions ultimately affect the future. Even with a good understanding of the past and the best projection of the future that can be made by at the time, many components constantly change. Some of these changes include: relationships, circumstances and laws.

Estate planning should be revisited from time to time, including the choices that have been made for trustees. When major changes take place, such as a divorce, a death in the family, a new marriage, children becoming adults, etc., you should reevaluate your estate plan and revisit the designation of your trustees.

Takeaway

Every person and every family has their own unique circumstances and relationships. There may be no perfect choice, and for some people, the choices may be limited.

Putting off doing your estate planning, ultimately leaves your choice of a trustee up to someone else. Someone will be required to step forward and take control when you are gone if you fail to make decisions on who will handle your estate. 

These 5 basic things to consider when choosing a trustee is a good place to start; however, additional factors are likely to be involved, as each situation is a little bit different.

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