How to Choose the Right Trustee for Your Trust

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Creating a trust is a powerful step in a comprehensive estate plan, but the document itself is only half the equation. A trust is only as effective as the person or institution you choose to manage it—the Trustee. This is one of the most critical decisions you will make.

The Trustee is responsible for managing the trust’s assets and distributing them according to your wishes, both during a period of your own incapacity and after you have passed away. This role requires a unique combination of integrity, skill, and diligence. So, what qualities should you look for?

Key Quality #1: A Deep Sense of Fiduciary Duty

At its core, a Trustee has a fiduciary duty. This is a legal obligation to act solely in the best interest of the trust’s beneficiaries. The Trustee must put aside their own interests and faithfully follow the instructions laid out in your trust document. This requires a person who is not only honest but also has the strength of character to act impartially, especially if there is potential for family conflict among the beneficiaries.

Key Quality #2: Honesty, Reliability, and Organization

Trust administration involves managing deadlines, keeping meticulous records, and ensuring distributions are made on time. The person you choose must be reliable and organized. Think about the people in your life: you want the person who is always on time and detail-oriented, not the one who is well-intentioned but consistently late or forgetful. The financial well-being of your beneficiaries depends on the Trustee’s diligence.

Key Quality #3: Sound Financial Judgment

A Trustee does not need to be a Wall Street wizard, but they should possess good money management skills. A significant part of their role may involve overseeing the investment of trust assets to ensure the funds can grow and support your beneficiaries for years to come. A Trustee with poor financial habits could unintentionally squander the legacy you worked so hard to build.

The Big Decision: Family Member vs. Professional Trustee

One of the main choices you’ll face is whether to appoint a family member (like an adult child or sibling) or a professional (like a bank’s trust department, a CPA, or an attorney).

  • Family Member Trustee: This is often the first choice due to the personal connection and lower cost. However, it can place a significant burden on your loved one and can be risky if they lack financial skill or if family strife exists.
  • Professional Trustee: A corporate or professional trustee offers impartiality, expertise, and experience, which is invaluable. This is often necessary for complex situations, such as administering a Special Needs Trust where improper distributions could jeopardize a beneficiary’s government benefits. The trade-off is typically higher administrative costs and a less personal connection to the family.

Making the Right Choice for Your Family

Naming a Trustee is a decision that should not be made lightly. It requires a careful assessment of your family dynamics, the complexity of your assets, and the needs of your beneficiaries. The right choice ensures your estate plan functions exactly as you intended.

If you need help creating a trust or are struggling with the decision of who to name as your Trustee, our attorneys can provide the estate planning guidance you need. Call our office at (919) 256-7000 to schedule a consultation.