When you are selecting a trustee as part of the trust creation process, you need to ensure that you select the right person. The trustee has many different responsibilities and serves a vitally important role. Before you decide who will fulfill this position, you need to understand what trustees are actually responsible for and what their legal obligations are.
The decision on who should serve as your trustee is just one of many important choices that you are going to have to make when you create a trust. You should talk with a qualified trusts attorney throughout the trust creation process so you can make informed choices about every aspect of creating your trust. Your trust should provide you, your family, and your assets with important protections and making informed choices is an important part of creating the protections.
When selecting trustees, the type of trust that you create can make an impact on the role that your chosen person will play and on when that person begins to take responsibility for actively managing trust assets.
For example, the job of a trustee will differ when you create a revocable living trust, which you may maintain substantial control over while naming a backup trustee to take over in the event of your incapacity, versus when you create an irrevocable living trust which requires you to give up substantial control over trust assets. The person who you put in charge of a special needs trust or a spendthrift trust is also going to have a different, and more active, role to play than the trustee for other types of trusts.
Still, when you create both a revocable trust and an irrevocable trust, the person who you select as a trustee will have a fiduciary duty and could have substantial responsibilities for managing trust assets and following instructions you set forth in your trust document. You want to find someone who you can count on to fulfill the role that the law assigns to trustees and someone who you can trust absolutely to manage your trust assets and act in the best interests of your beneficiaries.
Some of the key characteristics that you should look for when selecting the person to serve as your trustee include the following:
- Honesty: Above all else, the person who you select to manage your trust should be someone who you believe is honest. The individual you select is going to have a lot of control over assets and over important financial decisions and you want to know beyond a shadow of doubt that the individual is trustworthy and will do the right thing. While it is true the law requires honesty and prohibits conflicts of interest, it can still be a major aggravation to pursue legal action against a trustee who abuses his power or mismanages assets.
- Financial knowledge: The person who you select is going to have responsibility for managing the assets held within the trust. You want someone who has a good grasp of the management of the type of property and assets that are held within the trust. You need to ensure that the person who you select has good financial knowledge and can keep the assets safe and make smart decisions that could potentially help to increase the value of the assets that are held within the trust.
- Shared Philosophies: Odds are, if a successor trustee is acting under your trust, it will be to guide the assets left for the benefit of your children. You should select a trustee that shares the same philosophies as you with regard to how you would want the funds used. Do you believe your children should pay their way through college? Make sure your trustee feels the same or understands your position. Do you believe your children should want for nothing and should have everything they ask for? Make sure your trustee would be willing to do the same.
Selecting a trustee is not always an easy task. If no one in the family seems to be an appropriate choice or if the assets left in trust are of a large amount, a professional trustee is always a suitable alternative to consider. This could be a financial institution or an attorney/law firm. Speaking with a qualified attorney will help you make the important decision of selecting a trustee.