Once you have decided that your estate plan should include a trust, you need to decide who will be the trustee after you die. This is a complicated decision, involving family dynamics, personal responsibility, and a whole lot of trust on your part.
A trustee is responsible for administering the trust. What does this mean? They must make decisions about disbursements and investments for the trust. Family members may need to hire professionals – CPAs, attorneys, or professional investors – to help with that task. They need to separate their personal feelings and interests from the situation to serve the administration of the trust. And they need to treat the beneficiaries impartially.
Considerations for Picking a Trustee
There are three main possibilities for who can be a trustee: a family member or friend, a bank, or a professional (attorney or CPA). There are several factors to keep in mind:
- Family members will often best understand the intent of the trust and the needs of the beneficiaries. On the other hand, they may also inadvertently substitute their intents and beliefs for the intents of the trust. Professional administrators tend to stick to the letter of the trust better.
- Family members will often not charge a maintenance fee for administering the trust. However, they will often need to hire professionals – CPAS, bankers, and professional investors – and will charge those costs to the trust.
- The trustee is a fiduciary, meaning that they can be held personally liable for improper administration of the trust. Family members may not want to take on this responsibility.
- Banks will often not accept trustee responsibility for smaller accounts, under $500k or $1 million. Professionals will also have limits to what they will manage.
- Banks and professional administrators will always want to know how they can get out of being a trustee if things go sour.
If you are thinking of using a trust as part of your estate plan, consult with an experienced attorney for help with picking a trustee. If you have questions about who you should use as a trustee of your trust, contact Signature Law for a free consultation.