Each month, Andy’s answering a question that he wishes more clients would ask him, addressing timely topics that he thinks are worthy of the spotlight.
How do I select a trustee for my trust?
One of the decisions you’ll need to make if setting up a trust is to select a trustee. This is the individual (or individuals) that bear the legal responsibility for managing your trust.
The trustee’s responsibilities may include:
Investing, managing, and distributing assets
Filing taxes on behalf of the trust
Implementing the terms of your trust
Generally speaking, there are two buckets for you to consider when selecting a trustee: someone you know personally or a corporate trustee. As is the case with all financial decisions, only you can decide what’s best. But here are some questions worth considering when trying to make the decision.
If you’re thinking about identifying an individual (or individuals) you know as your trustee, ask yourself:
Is the individual good with money and paperwork?
Will the individual be too deep in grief to take on the added responsibilities?
Do I trust the individual?
Can the individual navigate hard conversations with loved ones?
On the flipside, considering a bank or trust company to act as your trustee is an alternative option. Ask yourself these questions to determine if a corporate trustee is the better route for you:
What fees will be charged by my corporate trustee?
Do I care if my trustee has a less personal relationship with me and my family?
Do I have the time and energy to select and vet a corporate trustee?
Would it benefit my loved ones to have a neutral party as a trustee?
Only you can determine the right approach for your unique circumstances. Thinking carefully about this selection allows you to move forward in establishing your estate plan with confidence.
A Final Word: Trustees vs. Executors
Trustees and executors have much in common, but are not the same. While a trustee is responsible for your trust, an executor is responsible for carrying out the directives of your will. Some of the duties are similar and considerations are often the same. But generally speaking, an executor’s job has an end date, where as trustees may inherit ongoing responsibilities.