How Do You Choose a Capable Trustee?

How Do You Choose a Capable Trustee?

If you have decided to create a trust, you must choose someone to serve as the trustee to ensure the trust is administered according to your wishes. The trustee1 is the manager of the trust assets.  The rules the trustee must follow are contained in the trust document itself.  The trust tells the trustee the people who benefit from the trust, when those beneficiaries will receive distributions, and generally contains other rules to instruct the trustee of his or her duties.  When the trust is first formed, the trust creator is often also the trustee until their death or incapacity.  A trustee can also be a beneficiary of the trust property, usually at the death of the creator.  At the death or incapacity of the creator, or at any other time that the creator decides, a person or institution will be named as the “successor” trustee to manage the trust assets.

The person or institution you name in the trust document as successor trustee should be carefully considered because an unreliable trustee can result in mismanagement and unnecessary waste of your assets. Additionally, because a trustee has significant power, there is also the possibility of abuse of that power that harms your beneficiaries. Despite the importance of this decision, too many individuals hastily choose a trustee without much thought.

Though it is always wise to consult with an experienced trusts attorney regarding a trustee, the following are some examples of factors you should consider:

  • Ability to do the job – Trustees have a number of duties and responsibilities in the management and administration of your trust. They must have a full understanding of the trust terms and applicable laws (and know when to seek legal advice if they are not sure), know how to successfully manage assets, and be able to diplomatically deal with the beneficiaries. While your trustee does not need a background in trust management or finance, he or she should demonstrate financial responsibility and an ability to deal well with others in their own affairs.  Second, you must trust this person to make ethical decisions and act in the best interest of you and your beneficiaries.
  • They can be impartial – A trustee is a “fiduciary.”  That means the trustee has the duty to manage the trust2 with the best interests of the beneficiaries in mind, without favoring certain beneficiaries over others, and without taking any actions that are self-serving.  Most of the time, a child can be a trustee of your trust.  However, , in some situations, this can cause tension and conflict in the family as the trustee would also be a beneficiary or too emotionally attached to do an effective job.
  • Willingness to serve as trustee – Serving as a trustee can be a thankless position, so you should make sure the chosen individual is willing to take on the task.  While most family members feel it is an honor to help their parent or loved one who is in need of help, a trustee who feels burdened by the task may not be diligent in managing your trust assets and may fail to take the time to carefully consider trust decisions.

Contact an experienced St. Louis elder law attorney for a consultation today

If you need advice in choosing a trustee or simply want to discuss how a trust may benefit you and your family, do not hesitate to contact elder law attorney Melissa Q. Leavy at The Elder Care Law Practice, LLC in St. Louis. Call 314-932-5573 to find out how we can help you.

 

References:

 

1https://www.law.cornell.edu/wex/trustee

2https://www.law.cornell.edu/wex/fiduciary_duties_of_trustees