Choosing a trustee is one of the most important decisions you will make when creating a trust. The right trustee should be trustworthy, organized, financially responsible, and capable of carrying out your instructions in the best interests of your beneficiaries.
A trustee has legal responsibilities that can last for years, sometimes even decades. While many people initially consider a family member or close friend for the role, it is important to evaluate whether that person has the skills, time, and temperament needed to manage the trust effectively.
What Does a Trustee Do?
A trustee is responsible for managing and administering assets held in a trust according to the terms of the trust document. Depending on the type of trust, that responsibility may include investing assets, making distributions to beneficiaries, maintaining records, filing tax returns, and communicating with beneficiaries.
The trustee must act as a fiduciary, meaning they are legally required to act in the best interests of the beneficiaries and follow the terms of the trust.
Because of these obligations, serving as a trustee involves far more than simply holding assets or carrying out occasional paperwork.
What Qualities Should You Look for in a Trustee?
Every family and every trust is different, but several qualities are worth considering before naming a trustee.
Financial Responsibility and Judgment
A trustee may be responsible for managing investments, preserving assets, and making decisions that affect beneficiaries for many years.
You do not necessarily need someone with a financial background, but you should choose a person who is responsible with money and capable of seeking professional guidance when needed. Someone who frequently takes unnecessary financial risks may not be the best choice for the position.
Ability to Make Objective Decisions
Trust administration can involve difficult decisions.
For example, a trustee may need to determine when a beneficiary should receive funds or whether a requested distribution complies with the terms of the trust. If the trust was created to protect assets for a beneficiary who struggles with spending, addiction, or other challenges, the trustee may occasionally need to say no.
Choosing someone who can remain fair and objective, even during emotionally charged situations, can help reduce family conflict and preserve the purpose of the trust.
Organization and Attention to Detail
Trustees are expected to maintain accurate records, track trust transactions, provide required information to beneficiaries, and comply with tax and reporting obligations.
A person who is naturally organized and attentive to details is often better prepared to handle these responsibilities than someone who struggles with paperwork or deadlines.
Does the Trustee Have Time to Serve?
Many people underestimate how much work can be involved in trust administration.
The trustee may need to coordinate with financial institutions, accountants, attorneys, investment professionals, and beneficiaries. Some trusts require ongoing management for many years, particularly trusts established for minor children, individuals with disabilities, or multiple generations of beneficiaries.
Before naming someone as trustee, consider whether they have the time and willingness to accept those responsibilities.
Should You Choose a Family Member or a Professional Trustee?
There is no universal answer.
A family member may have a better understanding of your values, relationships, and long-term goals. They may also have personal insight into the needs of your beneficiaries.
However, family dynamics can sometimes make trust administration more difficult. When disagreements arise, a family member serving as trustee may find themselves caught between competing interests.
In some situations, a professional trustee may be a better option. Professional trustees can include:
- Banks and trust companies
- Professional fiduciaries
- Some attorneys who offer fiduciary services
A professional trustee typically brings experience, objectivity, and administrative resources to the role. While professional services involve fees, they may help reduce conflicts and administrative burdens, particularly when managing larger or more complex trusts.
Understanding Trustee Liability
Before naming a trustee, it is important to understand that the position carries legal responsibilities.
Trustees can be held accountable for failing to follow the trust document, mishandling assets, making improper distributions, or neglecting required duties. Beneficiaries may have the right to challenge a trustee’s actions if they believe those responsibilities have not been fulfilled.
Because of this potential liability, some individuals may be reluctant to serve, especially if they are unfamiliar with trust administration.
Building a Strong Trust Plan Starts With the Right Trustee
The person you choose as trustee can have a significant impact on how successfully your trust functions over time. While trustworthiness is important, it is only one part of the equation. Financial judgment, organization, objectivity, availability, and a willingness to accept fiduciary responsibilities all deserve careful consideration.
At Surprenant, Beneski & Nunes, P.C., we help individuals and families throughout Southeastern Massachusetts and Cape Cod create estate plans designed to protect their goals and their loved ones. If you are considering a trust and need guidance selecting the right trustee, we are available to discuss your options and help you make an informed decision.
