WHO SHOULD BE YOUR TRUSTEE??

When creating an estate plan, you have a wide variety of trust options to choose from to address your asset and family situations and your planning goals. While the trust or trusts within your estate plan will be unique to you and your needs, one critical question will remain the same regardless of the plan you create: Who should be your Trustee?

Choosing the right Trustee is imperative for the success of your trust(s) and your overall estate plan. In many ways, the Trustee is the quarterback of your estate planning team. The Trustee not only oversees the assets within a trust; to optimize the success of your estate plan, the Trustee will also need to facilitate the relationships, interactions and decisions among your professional advisors (i.e. accountants, attorneys, financial planners, insurance brokers, etc.) and the income and remainder beneficiaries of the applicable trust. Many times, a particular Trustee is expected to administer separate trusts for multiple beneficiaries, and as a result, such Trustee is obligated to ensure that each trust is administered fairly, and impartially, among all trust beneficiaries.

In most instances, clients just assume that one or more of their children should be their Trustee, but in reality, this is often not the best option. The personalities, believes, relationships and time constraints of an individual must be considered before appointing such person as your Trustee. In particular, some of the questions you should consider when deciding whether to name a family member or other individual, and particularly a child, as a Trustee, are as follows:

  • Is the individual agreeable to serving as your Trustee? Do they know they are nominated?
  • If your Trustee is also a beneficiary of the trust, does such individual have similar financial values and beliefs to the other beneficiaries?
  • Is your Trustee adept at financial/business matters? Does your Trustee work in the same or similar business as your business?
  • Can the current Trustee appoint an individual or corporate trustee as Co-Trustee?

As these questions indicate, the decision of which family member to name as your Trustee is not always as simple as naming your children together or in order from oldest to youngest. Further, while many clients prefer an individual trustee appointment, other clients believe a corporate or private fiduciary presents the best Trustee options for their estate plan. It is true that in the right circumstances, a corporate Trustee can provide many advantages to the administration of an estate. However, it is important that you fully understand and consider the role of a corporate Trustee before making this type of appointment. Such considerations include:

  • How does the corporate Trustee charge its fees? Does the corporate Trustee have a minimum investable asset requirement?
  • What other services may the corporate Trustee provide?
  • What are the corporate Trustee’s investment philosophies/procedures?
  • What happens if your nominated Trustee, or your favorite trust officer, goes away?
  • When can a beneficiary remove or replace the corporate Trustee and who would succeed the removed trustee?

These various questions represent just some of the many questions that you should consider before deciding who to appoint as a Trustee of a trust. Because the role of Trustee is so vital to the success of your estate plan, it is highly recommended that you sit down and discuss your various Trustee options with your estate planning attorney prior to making any final decisions regarding the appointment of a Trustee. By thinking through these questions now, you will hopefully be able to avoid a lot of potential grief and emotional expense later on.

To discuss the role of Trustee of your trust(s) or any other estate planning related items, please contact one of our experienced estate planning attorneys today for an appointment at 480-951-8044 or info@bskazlaw.com.  

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