To ensure that the wishes of their legacy are carried out successfully, individuals often decide to establish a trust. Whether creating a revocable or irrevocable trust, a significant decision during this process is the naming of a trustee or trustees. We’ll take a look at the general duties of a trustee and share worthy characteristics to consider in determining a trustee.
The Responsibilities of a Trustee
Simply put, a trustee’s primary role is to properly carry out the wishes of the grantor. However, with delicate conditions sometimes held within a trust, it’s crucial to choose a trustee who can skillfully implement a number of obligations. As Forbes points out, trusts are often established to prevent a beneficiary’s mismanagement of their inheritance, and sometimes they’re created to arrange additional support for beneficiaries who have special needs. While some trustors of a living trust will name themselves as a trustee, a time may come when a separate trustee is necessary upon the grantor’s passing.
Choosing a Trustee: Qualities to Examine
Diligence and reliability. A trustee is delegated to perform tasks over many years, so it’s vital to choose an individual or body of trustees who understands the long-term dedication that is necessary to manage a trust.
Wisdom and sound judgement. As Forbes notes, a good trustee isn’t required to possess extensive knowledge of the financial industry or the field of law but they should hold considerate understanding of the grantor’s goals and maintain awareness of the conditions of the trust.
Impartiality. Some grantors choose a family member or trusted friend as a trustee, while some grantors may decide to execute a trust through a trust company. Whether a grantor chooses an individual close to them or opts for a third party, a suitable trustee should be free of potential conflicts of interest.
Both AARP and Forbes suggest reviewing trustees periodically to determine if circumstances of a trustee have shifted to the extent of needing to name a replacement or alternate trustee.
A trustee (or team of trustees) who is honorable, perceptive, and evenhanded can be a valuable resource in the successful implementation of a trust. An estate planning attorney can provide further guidance during the process of choosing a trustee.