When choosing a trustee, many people will automatically consider their spouse or some other close friend or family member. However, there is a lot more that you need to think about when choosing a trustee. An experienced estate planning lawyer can help you choose the right trustee for managing your family’s affairs.
What Does a Trustee Do?
The best place to start in choosing the right trustee is to revisit what a trustee does when administering a trust. The following encompass a trustee’s chief responsibilities:
- Administration of the trust according to the terms of the trust agreement
- Management of trust assets according to trust objectives
- Distribution of trust assets to beneficiaries as provided for by the trust agreement
- Management of third-party professionals such as investment advisors or accountants
- Reporting on and accounting for trust assets
Many, if not all, of these responsibilities require considerable financial acumen and experience. Reviewing these responsibilities is a reminder that choosing the right trustee requires careful consideration.
Do They Have the Necessary Knowledge and Skills?
After reviewing what a trustee does, the first question you should ask yourself when choosing a trustee is whether your potential trustee has the knowledge and skills they will need to administer your trust effectively. This requires understanding what a trust is and how it works, but it also entails knowledge of financial practices, products, and markets.
Financial expertise aside, on a more basic level, you also need to be confident that your trustee has basic organizational and business skills. If they are easily overwhelmed, disorganized, and unfamiliar with basic banking and investment practices, they may not be the right person to serve as trustee.
Do They Have the Time and Availability to Administer the Trust?
To meet their responsibilities as trustee, the person you choose needs to be actively engaged in administering and managing the trust. The trustee should actively monitor the financial markets in which trust assets are invested in to guard against unmitigated losses. The trustee may need to hire and manage professionals to manage valuable assets such as investment property. They will need to prepare accountings and various reports for the beneficiaries. In short, serving as a trustee is a challenging endeavor. It will require considerable time and effort. Depending on the estate size and complexity of estate assets, it may require weekly or even daily attention. Make sure that whoever you choose as trustee has the time and availability needed to devote to administering your trust.
Are They Willing to Take on This Responsibility?
Lastly, it is important to note that trustees are fiduciaries. This means that they have a legal obligation to act in the best interest of the beneficiaries at all times. While this sounds simple enough, your trustee could face personal liability if one or more of the beneficiaries claim that they have breached their fiduciary duty. In other words, the trustee could be sued if one of the beneficiaries believes they failed to manage the trust appropriately.
Contact Goodwin Como for All of Your Trust Administration Needs
At Goodwin Como, we understand the importance of having the right people involved in administering your estate. If you would like guidance on choosing the right trustee for your estate, call us today at 724-438-1616 to contact us online to schedule a free consultation.