Did You Choose the Right Trustee?

Choosing just the right trustee is a highly important decision, and in many cases more imperative than that of the proper executor of your estate. They will have discretionary authority over an entity that can last for multiple generations and will have the responsibility of decision making and asset investing for your trust.

  • Trustee Qualifications
    • A trustee should have sound professional financial judgment, and be reliable and trustworthy. They will be in charge of every financial and tax related responsibility of the trust including collecting trust assets, paying bills, filing trust tax returns and accounting as well as distributions to the beneficiaries, balancing the competing interests of income beneficiaries and remaindermen, considering whether to make loans of, or pledge, trust assets, and monitoring the investment performance of the trust.
  • Should You Select a Family Member?
    • Family members may have a stake in the success of the trust, prompting a heightened level of care and concern. However, if the family member chose to be trustee is also a beneficiary of the trust, their authority over trust distributions will be limited. If you would prefer that a trustee have broad discretionary power over trust distributions, you will need to name at least one trustee with no beneficial interest in the trust.
  • Should You Select an Unrelated Party?
    • An unrelated party, such as a close family friend, professional advisor or bank is another option. You may be hesitant to name a family friend as a trustee as they will then be granted intimate knowledge of your family’s finances. If you are creating a long-term “dynasty trust,” you may want to consider naming a bank or trust company as trustee, since the trust will last beyond the lifetimes of any individuals you may know.
  • Revisiting Your Choice of Trustee?
    • One’s circumstances and relationships often change through the years, and you will want to make sure that the person or institution you selected a few years ago is still the right choice.

See Cheryl E. Hader, Monika Jain, & Avigail Goldglancz, Did You Choose the Right Trustee?, KramerLevin.com, July 16, 2018.

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