Important Considerations for a Trustee


It seems that I have had an unusually large number of conversations recently about how to choose a trustee for a trust.  Therefore, I felt this might be a good time to discuss some important considerations when faced with this decision.  Since the trustee will manage your assets when you are no longer able, it is a decision that should come with significant thought.  The trustee will need a broad set of skills to be successful and they must be someone who will always act in the best interest of your beneficiaries.  Some of the attributes that make this possible include the following.

Integrity – You will be entrusting your life’s work to someone else’s care.  Honesty, loyalty and confidence that the trustee will act in the best interest of the beneficiaries are a must.

Availability –Consider the proposed trustee’s proximity to the beneficiaries and the assets to be managed.  You should also think about their ability to serve for an extended period, as frequent changes in the trustee may impact the effectiveness of the trust.

Competence – A trustee must have the legal capacity to enter in to contracts and make decisions.  Minors or incompetent adults are not viable choices as trustees.

Impartiality – The ability to make decisions exclusively for the benefit of the beneficiaries is paramount.  This is complicated when the trustee must act in a way that may be detrimental to themselves, which can happen in certain family situations.

Financial Security – Will the trustee have the ability to make the beneficiaries whole in the event of a costly mistake?  Or, will the trustee’s own financial challenges tempt them to make for the wrong reasons?

Investment Experience – Effectively managing the investments of the trust will be an important duty of the trustee.  They must have investment experience, or the willingness to hire advisors who can help them, to be effective managing the assets of the trust.

Accounting and Tax Planning Knowledge – The trustee must regularly report to the beneficiaries on the status of the trust assets.  They may also need to address complicated tax issues that arise while administering the trust.  This can be a difficult situation for those who are unfamiliar with these duties.

Willingness to Serve – Above all, a trustee must be willing and able to serve for the long term.  Managing a trust can be a burden that is often under estimated.  The circumstances and resources of any proposed trustee must be carefully considered prior to naming them in an official capacity.

The above considerations are just some of the factors to think about when choosing a trustee.  Given the complexities that can arise, you may find the resources of a professional trustee beneficial to your situation.  At Legacy Trust, we are happy to serve as a sole trustee, co-trustee, or to provide expertise and resources as an agent for an individual trustee.  We would be happy to discuss this important decision with you in more detail whenever the time is right.