It is essential to choose a qualified trustee because this person (or institution) is responsible for carrying out your wishes and protecting your trust’s assets.
The law requires a trustee to be a legally competent adult, that is, a person 18 or over capable of managing his or her affairs. Other than that your options are wide open, at least with regard to the law. Many people name a spouse or an adult child to serve as their trustee. Whomever you choose, you want to make sure that he or she is, pardon the pun, trustworthy.
In addition to being someone you trust, your trustee must have the ability to serve in this capacity. While legal or financial experience is not essential, good judgment is. So, too, are time and energy. Your trustee must have enough time available to spend on the responsibilities involved in being a trustee, and to do so for an extended period of time.
If you have no one you can count on to serve as trustee, or you don’t want to burden a loved one with this responsibility, a corporate trustee (such as a bank or trust company) may be the way to go. There are several advantages to this approach: It can prevent family infighting over who should serve as trustee; a corporate trustee will likely have plenty of expertise in this area; and a corporate trustee may offer investment management, tax planning, and other services as part of their fee.
Another option, somewhat in between a family member and a corporate trustee, is a professional trustee. I have a list of local trusted attorneys who serve as trustees, and when I think they are the right fit for the client, I suggest that.
If you are considering a corporate or professional trustee, be sure to ask the following questions:
- How much does the service cost and what is included?
- How long has the trustee been in business?
- How many trusts has the trustee managed?
- What is the average amount of assets held in the trusts managed by the trustee?
- What is their minimum balance requirement?
- Do they manage only liquid assets, or will they also manage real estate?
As always, I’m here to help you make this important decision.
Until next time, take care….
Alexis