What You Need to Know About Choosing a Trustee

It's not always immediately clear who should be the person you place your literal trust in to manage your financial affairs, so here are some critical things to consider first.

When a trust is established, the trust owner must name a trustee. That person is responsible for your financial affairs which includes collecting income, paying bills and taxes, saving and investing for the future, buying and selling property, providing for your loved ones, keeping accurate records, and generally keeping things organized and in good order. You can name yourself the trustee of your revocable living trust, and if you are married, your spouse can be your co-trustee. However, most irrevocable trusts do not allow the trust owner to also be the trustee. But even in a revocable living trust scenario, you may not always be the best choice for the job of trustee.

 

Who Can Be Your Trustee

If you are married, your spouse can be the trustee, or the co-trustee. If either of you becomes incapacitated or dies, the other can continue to handle your financial affairs without interruption. Most married couples who own accounts and property together, especially those who have been married for some time, are usually co-trustees.

 

You may also name your children, a trusted friend, or a professional or corporate trustee such as an attorney, accountant, or trust company. Many people choose this latter option because a trust professional has experience and investment skills specific to the trust entity. People without children or children they trust with finances may also choose this option. Trust professionals are impartial to family issues and drama, so they can make clear-headed decisions when necessary. You may also just not have time, experience or desire to manage your investments and trust on your own.

 

Naming someone as your co-trustee while you’re alive is a great way for that person to become familiar with your trust, and to learn firsthand from you how you’d like it to operate. This allows you to evaluate whether this person is the right choice to become the single trustee once you have passed away. In some cases, with an irrevocable living trust, you may not name yourself as the trustee due to tax restrictions, in which case a trust professional may be the right choice. Professional or corporate trustees will charge a fee to manage your trust. However, the fee is generally quite reasonable, especially when you consider their experience, the services provided, and the investment returns that a professional trustee can deliver.

 

Naming someone else as the trustee or co-trustee doesn’t mean you lose control of your finances. The trustee you name is required to follow the instructions you write into your trust, and they must report to you while you’re alive. Of course, you can always change your trustee if you see fit, or if they predecease you.

 

Things to Consider

  • Honestly evaluate whether you are the best choice to be your own trustee. It’s OK to admit that someone else may be better equipped to do the job, especially with regard to investing your money.
  • Name someone to serve as co-trustee now. This eliminates the time a successor would need to become knowledgeable about your trust, your accounts and property, and your beneficiaries’ needs and personalities. It would also allow you to evaluate whether the co-trustee is the right choice to manage the trust in your absence.
  • Evaluate your trustee candidates carefully and realistically. Look at how they manage their own finances and investments. Also consider the time and ability they have to serve in this role. And of course, whether or not they are willing to take it on.
  • If you are considering a professional or corporate trustee, talk to several. Compare their services, investment returns, and fees.

 

 

Davis Law Group Can Help

In addition to helping you set up your trust and estate plan, we can help you select, educate, and advise your successor trustees so they have support and know exactly what to do to carry out your wishes. Contact us today to talk about your specific trust and estate plan needs.