By: Daniel M. Surprenant, Esq., CELA, Managing Partner
I’ve seen firsthand that one of the most important decisions you’ll make when setting up your estate plan is choosing your trustee. This is the person or company you’ll trust to manage and distribute your assets according to your wishes, so it’s a big deal.
What Does a Trustee Actually Do?
Think of your trustee as the manager of your trust. They step in to handle your financial matters, if you can’t due to illness or after you pass away.
- If you become unable to manage your affairs: Your trustee will handle your finances, pay bills, manage investments, and make decisions about your property – all based on what you’ve outlined in your trust. It’s a huge relief knowing someone capable is looking out for you.
- After you pass away: The trustee ensures your assets go to the right people at the right time, as you’ve specified in your trust. They’ll handle legal and financial details, pay any debts, and make sure everything is transferred smoothly.
What Makes a Good Trustee?
Choosing a trustee is like hiring someone for a very important job. You want someone with the right skills and character. Here’s what we suggest our clients look for:
- Common Sense: They should be practical and make smart financial decisions.
- Honesty: You need someone you can completely trust to act in your family’s best interest.
- Organized: Managing a trust involves paperwork, deadlines, and carefully following your instructions.
- Knows When to Ask for Help: A good trustee isn’t afraid to get advice from experts like accountants, financial advisors, or lawyers when needed.
- Calm Under Pressure: Trustees might face stress from family members, so they need to be able to handle those situations fairly and calmly.
- Time: Being a trustee takes time, especially for complicated trusts. Make sure the person you choose has the availability.
Should You Pick a Family Member or a Professional?
Many people wonder if they should ask a family member or hire a professional company to be their trustee. Both options have their pros and cons.
Naming a Professional Trustee (Like a Bank or Trust Company)
This can be a great option, especially for complex trusts or if you worry about family disagreements.
Pros:
- Fair and Unbiased: Professional trustees don’t have personal ties to your family, so they can make decisions without favoritism. This is huge if your beneficiaries don’t always get along.
- Expertise: These companies specialize in managing trusts. They know the ins and outs of laws, investments, and taxes.
- Always There: Unlike an individual, a company won’t get sick, retire, or pass away, ensuring continuous management of your trust.
Cons:
- Cost: Professional trustees charge fees, usually a percentage of the trust’s assets. While it’s an investment, the benefits often outweigh the cost for larger or more complicated trusts.
Naming a Family Member as Trustee
Many prefer to keep trust management within the family. This can work well, especially if assets are simply divided equally among beneficiaries without ongoing management.
However, be careful. If one child is in charge of another sibling’s finances, it can create tension. It’s important to consider your family dynamics and how people get along.
Don’t Forget Your Backup!
No matter who you choose as your main trustee, it’s incredibly important to name successor trustees (backups). Life is unpredictable. Your first choice might become ill, pass away, or simply be unable to serve. Having backups ensures your trust continues to run smoothly without any hiccups.
Choosing your trustee is a big decision, but it’s one of the most important steps in securing your legacy. We’re here to help you navigate these choices and create an estate plan that works best for you and your family.
Ready to talk about who would be the best trustee for your specific situation? Give us a call!
Legal Notice: This content is for educational purposes and should not be construed as legal advice. Every case is unique; please consult with a qualified professional before taking any action based on the information contained in this post. Use of this content does not create a professional-client relationship.
