In setting up a trust fund, one of the most important decisions you will make is who will serve as the trustee. The trustee you name will play a key role in administering your trust, and after you die the trustee will be tasked with ensuring assets are distributed according to your wishes. Even the most scrupulously-structured trust funds can run into trouble without the right trustee to guide them.
As such, it’s not a decision to make lightly. In this post, we’ll outline some of the key rationale to consider as you seek the right trustee.
Find Someone Who is Willing, Qualified, and Capable
First things first: It’s tempting to simply name your best friend or a close family member as the trustee, but before you do so, ask these questions:
- Is this person willing to serve as trustee? Don’t just assume the answer is yes, as being a trustee can require time-consuming work. Have a conversation with the individual to make sure you’re on the same page together.
- Is the person qualified? For instance, if your trust includes a lot of real estate investments, your trustee should probably be someone who has a background in real estate.
- Finally, is the person capable? Do they have good sense about legal and financial matters? And do you trust them to be responsible with the handling of your assets?
Think Twice Before Appointing a Family Member
There is no legal reason why you can’t appoint a family member to be your trustee—but be warned that picking a family member isn’t always the best idea. That’s because the trustee is someone who will need to be totally impartial in how and when they divide assets—so if you think that picking a family member could bring any hint of perceived favoritism or hurt feelings, it’s probably best to pick someone else.
Avoid the Cotrustee Trap
You also have the option of naming multiple people as trustees—but cotrustee situations can be problematic. That’s because all trustees will have to sign off on any decisions that are made about the trust, and getting them all on the same page can be challenging. Plus, it’s common for one trustee to do the lion’s share of the work and grow in resentment of the other trustees—not an ideal situation.
Consider Continuity
One more thing to consider: It’s possible that your appointed trustee could die before completing the necessary trust duties, and you’ll want to make sure there is a continuity plan in place. One option is to pick an individual who you know will pick a successor in a timely manner, but an even safer approach is to select an institutional trustee—like a bank or estate planning firm. That way, you can rest assured that there will always be someone on hand to attend to your assets.
Picking the Right Person to Manage Your Trust
There are a number of factors to keep in mind as you select your trustee, and as you seek the most trustworthy and capable person for the job. A good way to cover your bases and consider all the best options is to consult with an estate planning lawyer, who can walk you through this important decision.
Whether you want to establish a living trust or simply have questions about the trustee role, Singh Law Firm is here to help. We’d love to talk with you more about any of your estate planning questions. To schedule an appointment, reach out to our California law office at your next opportunity.
