To be certain that your wishes are followed, many people create a trust. One of the tasks in this process is to designate the person who can best carry out your plans. That’s the trustee.
Kiplinger’s recent article, “How to Choose the Right Trustee for Your Estate,” explains that being a trustee means accepting specific duties and obligations. For example, this includes showing impartiality between the interests of the current and future beneficiaries, accurately accounting to all beneficiaries, wisely investing trust funds, managing trust property and adhering to the prohibition against self-dealing.
It’s important to understand the strengths and weaknesses of your trustee and that she appreciates her responsibilities and personal liability to the trust beneficiaries. When considering a trustee, ask yourself these questions:
- Can your trustee separate her personal feelings and interests from those of the beneficiaries and exercise sound judgment?
- Will your trustee treat all the beneficiaries impartially?
- Is your trustee financially savvy enough to analyze investments?
- Will a child who is balancing her family and career have enough time to devote to serving as trustee?
Family members are closer to the beneficiaries and are more likely to understand their needs. A family member trustee may charge her costs to the trust but typically doesn’t charge an administrative fee. When a sibling is selected as trustee, it can enflame feelings and resentments among the beneficiaries. A relative without any trust experience may run into trouble, because of his ignorance. He will also be liable for any damages.
If you choose an attorney, accountant, or financial adviser, ask yourself these questions:
- Can she understand the unique dynamics of your family?
- What experience does she have as a trustee?
- What are the administrative fees and costs associated with being a trustee?
You can also select a corporate trustee. Banks and trust companies provide professional fiduciary services and act independently. Opting for a corporate fiduciary may eliminate some of the conflicts in the family, while providing experienced and professional investment and administrative management. Think about these questions:
- Will they invest the time to understand my family and their needs?
- What are the corporate trustee’s standards?
- Does the trustee understand the goals of my trust?
- What are the corporate trustee’s fees?
Corporate trustees follow specific procedures to ensure unbiased and professional services.
Many of the answers to these questions will depend on the size and the nature of your trust. Talk to a trust attorney about all of the details.
Reference: Kiplinger (November 20, 2018) “How to Choose the Right Trustee for Your Estate”