How do you choose the right trustee? What are your options? What does a Trustee do? Choosing the right trustee for your trust is essential to ensuring your trust accomplishes your goals.
Imagine you are coaching the super bowl. Your team is down by 4 with 10 seconds left to play. You are at the 5-yard line. Your team has momentum. They drove down the field with confidence and zest. You tell the team to run the ball. The whistle blows and your QB makes the handoff to the likely MVP of the game, he has the most yards for night, he is a leader off and on the field, and your team has complete trust in him. He goes down behind the line of scrimmage and time runs out. What went wrong?
Your QB handed the ball off to a wide receiver who sometimes takes a quick snap. But was he the right player for that play? No. The coach failed to properly consider WHO should run the ball & who has the necessary skillset to ensure the play works as intended. The good news, you are not in the super bowl and you have more than 10 seconds to pick the RIGHT trustee to ensure your plan’s success. So let’s get started…
Before you can select the right trustee, you need to understand the general duties of a trustee. Of course, this can vary greatly depending on the type of trust you are setting up. Today, we are going to focus on revocable trusts. A nursing home protection trust and special needs trust have additional duties and considerations.
General Trustee Duties:
- Make Investments
- Pay Bills
- Prepare Tax Returns
- Manage Accounts
- Make Distributions
- Communicate with Beneficiaries
- Hold Assets
- Safeguard Trust Property
- Follow Trust Terms
- Act in Best Interest of Beneficiaries
Not every duty has to be carried out by the same trustee and not every trust has to have the same trustee. While someone may be the right person to ensure your goals are fulfilled, they may not be the best with investing your assets. A separate investment advisor or trustee may be named. Trusts are flexible. If you have a concern or a fear about naming a trustee discuss it with your attorney to learn about other options that are available to you. You don’t know what you don’t know.
You also need to consider successor trustees in the event your named trustee cannot serve when called upon. We recommend that you have three trustees named in sequential order to ensure your trust always has someone to serve. Of course, your trustee selection should be reviewed every 3-5 years or as recommended by your attorney to ensure it stays up to date and the position is filled by someone that can effectively serve. Check out our Trustee Checklist to see if your trustee checks all the boxes. If not, book a call to discuss your other options.
