What Kind of Person Should be Your Trustee?

IIf you are a business owner, then you understand the importance of earning a client’s trust. They want a sense of your integrity and experience level. They want to know your motives are not just about making a buck and that you will look out for their best interests.

When you create a Revocable Living Trust, you must choose someone to assume the role of Trustee after you die or if you were to become incapacitated. Of course, this decision is not as simple as picking a favorite uncle or your eldest child. Choosing can be difficult.

What advice can I give you to help you pick an after-death or disability Trustee?

Roles and Responsibilities of a Trustee

First, understand the fiduciary duties of the Trustee. The Trustee manages the assets in the Trust in the best interests of the beneficiaries and makes decisions regarding how assets are invested or released.

You need assurances that your chosen Trustee is a responsible person who will carry out your wishes, make sound judgments and seek out professional advice when necessary.

Typically, this role is assigned to a spouse, relative, close friend, business associate, professional advisor, a corporate fiduciary. Sometimes, co-trustees are chosen from a combination of these candidates.

You Can Keep It in the Family

A relative can be a good choice as Trustee if he or she:

1. Is competent to handle the finances and will follow the Trust’s instructions
2. Has adequate time and a genuine interest to take on the role.
3. Will avoid family conflicts by being unbiased and unemotional when making decisions.

Corporate Fiduciaries as Trustee

Some Trusts are complex or may be designed to benefit heirs for many, many years to come. Banks and trust companies are regulated by the government and can manage Trusts for decades. Their advantages include:

1. They don’t die or become incapacitated.
2. They act objectively in following a Trust’s instructions.
3. They keep good records and have estate administration, tax and investment expertise.

Considering a Professional Advisor

Sometimes a family member, friend or a trust company will not be the right choice for you. They might be unavailable, unreliable or simply too expensive.

This can make choosing a professional familiar with your plans a good choice, providing there is no conflict of interest. The Trustee could be a financial advisor, an estate planning attorney, a tax professional, or a combination of these professionals.

Regardless of who you choose, the basic qualities of a good Trustee are the same: integrity, good judgment, and objectivity.

I hope this article has helped you and your family. As always, if you have a specific concern or case, please contact our offices. We are happy to help.

Tagged as: Asset Protection, Estate Planning, Family, Small Business, Trusts, Wealth Protection