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Whether you are establishing a new trust or modifying an existing one, selecting the person or institution who will act as your trustee is one of the most important decisions you will have to make. Although it is normal to consider using a family member or friend as a trustee, consider these questions to see if this is really the best choice for your family.
What Qualifications Should a Trustee Have?Some of the most important skills a trustee must have are:
- Being able to properly administer the trust and meet the needs of the beneficiaries
- Truly understanding the duties and responsibilities of a trustee
- Being available for a long period of time and having a plan for what happens when they can no longer perform their duties
- Ability to exercise good judgment and being free of conflicts of interest
- Willingness to recognize what they don't know, combined with the ability to seek out and follow expert advice
- Having the time required to serve the needs of the beneficiaries
- Ability to say "no" to requests from beneficiaries that do not align with your wishes and to tackle the family conflict that may develop as a result
Benefits of Selecting a Corporate Trustee:
If your friends and family don't have the right skills to be a Trustee or if you don't want to burden them with the responsibility, consider working with a professional trust company.
A corporate trustee has a deep understanding of trust laws, federal and state trust tax rules as well as many other areas of fiduciary standards of care. They are also regularly examined and reviewed by independent auditors and either state or federal banking regulators. Additionally, as professionals, they carry appropriate liability insurance and bonds. Individual trustees typically do not realize the standard of care and potential liability that comes with acting as a fiduciary, thus increasing the likelihood that they will breach their fiduciary duty.
Choosing a trustee is an important decision. With some thoughtful consideration and research, you can choose the trustee that best meets your needs. To learn more check out, "8 Reasons to Use a Corporate Trustee".
