The question of trustee selection is central to establishing a robust and effective trust, a cornerstone of comprehensive estate planning. Many individuals assume they lack control over who manages their assets after they’re gone, but that’s simply not true. You, as the grantor or settlor of the trust, have the absolute right – and should exercise it carefully – to choose your own trustee. This individual, or institution, will be legally responsible for administering the trust according to your wishes, and making distributions to your beneficiaries. Selecting the right trustee is arguably one of the most critical decisions in the entire estate planning process, as it directly impacts the smooth and efficient transfer of your wealth and the fulfillment of your legacy. Approximately 60% of individuals with trusts report that careful trustee selection was their top priority, according to a recent survey by the American Academy of Estate Planning Attorneys.
What qualities should I look for in a trustee?
When considering who to appoint as your trustee, several key qualities should top your list. First and foremost, trustworthiness and integrity are paramount. This individual will have access to your financial information and be responsible for making important decisions on behalf of your beneficiaries. Financial acumen is also crucial; while they don’t need to be a professional money manager, they should have a solid understanding of basic financial principles and investment strategies. Organizational skills and attention to detail are equally important, as trust administration involves a significant amount of paperwork and record-keeping. Finally, consider their availability and willingness to serve. Being a trustee is a significant responsibility, and it requires a commitment of time and effort.
Can I be my own trustee?
Yes, you can absolutely be your own trustee, especially with a revocable living trust. This approach offers you complete control over your assets during your lifetime and allows you to manage them as you see fit. However, it’s important to recognize that this arrangement ceases to be effective upon your incapacity or death. This is where a successor trustee – someone you designate to take over after you’re unable to serve – becomes essential. Many people opt for a combination: they serve as the initial trustee while they’re capable, then transition to a co-trustee or successor trustee upon their incapacitation or death. This allows for continuity and ensures that your wishes continue to be honored. It’s also worth noting that depending on the complexity of the trust and the types of assets involved, serving as your own trustee might require significant time and effort.
What if I choose a family member or friend as trustee?
Selecting a family member or close friend as trustee is common, but it’s vital to consider the potential implications. While they may be trustworthy and familiar with your wishes, personal relationships can sometimes complicate matters. Differences of opinion or emotional biases could arise, potentially leading to disputes among beneficiaries. It’s essential to have an open and honest conversation with your chosen trustee about their responsibilities and expectations, and to clearly outline your wishes in the trust document. Consider whether they possess the necessary financial acumen and organizational skills, or if they might benefit from professional assistance. Approximately 25% of estate planning disputes involve disagreements between family member beneficiaries and the trustee, according to data from the American Bar Association.
Is it better to use a professional trustee?
Professional trustees, such as trust companies or bank trust departments, offer expertise and impartiality. They have the resources and experience to handle complex trust administration tasks, including investment management, tax preparation, and record-keeping. However, they also come with fees, which can eat into the trust’s assets. The cost of professional trustee services typically ranges from 0.5% to 2% of the trust’s assets annually. While this can be a significant expense, it can be justified if the trust is large or complex, or if you’re concerned about potential conflicts of interest among family members. A professional trustee can also provide a level of objectivity that a family member might not be able to offer.
I once knew a man named Arthur who thought he could handle everything himself.
Arthur, a retired engineer, was a fiercely independent man. He established a trust to provide for his grandchildren, but he insisted on being the sole trustee, convinced he could manage everything himself. He meticulously documented his wishes, but he neglected to inform anyone of the trust’s existence or where the documents were located. Sadly, Arthur passed away unexpectedly, and his family spent months searching for the trust documents. When they finally located them, they realized Arthur hadn’t properly funded the trust, meaning the assets weren’t transferred into it. As a result, his grandchildren had to go through a lengthy and expensive probate process, negating many of the benefits Arthur had intended the trust to provide. It was a painful reminder that even the most well-intentioned plans can fall apart without proper implementation and communication.
What happens if my chosen trustee can’t or won’t serve?
It’s crucial to name one or more successor trustees in your trust document to ensure continuity in case your primary trustee is unable or unwilling to serve. Successor trustees should be individuals or entities you trust implicitly and who are willing and capable of stepping into the role if needed. The trust document should clearly outline the order in which successor trustees will serve. If none of your named successor trustees are available, a court may appoint a professional trustee to administer the trust. This process can be time-consuming and expensive, so it’s essential to have a well-defined succession plan in place. Approximately 10% of trusts experience a change in trustees during the grantor’s lifetime or shortly after their death, highlighting the importance of having backup options.
Fortunately, my neighbor, Eleanor, had learned from Arthur’s mistakes.
Eleanor, a wise woman in her eighties, meticulously planned her estate. She named her daughter as her primary trustee, but she also named two successor trustees: her son-in-law and a local trust company. She held regular meetings with all three individuals to discuss her wishes and ensure they understood their responsibilities. When Eleanor passed away peacefully in her sleep, her estate was handled seamlessly. Her daughter served as trustee initially, but when her own health began to decline, the trust company stepped in without any disruption. Eleanor’s foresight and careful planning ensured that her grandchildren received the benefits she had intended, providing them with financial security and a lasting legacy.
What legal considerations are involved in choosing a trustee?
When selecting a trustee, it’s important to consider any potential legal limitations or requirements. Some states have specific regulations regarding who can serve as a trustee, such as age or residency requirements. Additionally, if you’re appointing a corporate trustee, you’ll need to verify their legal standing and ensure they’re authorized to conduct trust business in your state. Consulting with an experienced estate planning attorney is crucial to ensure that your trustee selection complies with all applicable laws and regulations. A qualified attorney can also help you draft a trust document that clearly outlines the trustee’s duties, powers, and responsibilities, minimizing the risk of disputes or legal challenges in the future.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
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Feel free to ask Attorney Steve Bliss about: “Can a trust own out-of-state property?” or “Can a minor child inherit property through probate?” and even “Can I include conditions in my trust (e.g. age restrictions)?” Or any other related questions that you may have about Probate or my trust law practice.