What factors should I look for when naming a trustee?
Selecting a trustee for your trust is one of the most important decisions you will make when you embark on your estate planning journey. Your named trustee will be responsible for transferring assets within the trust to the beneficiaries or continuing to manage your trust after your death. A trustee’s role can be complicated and may last for several years. Our Tampa estate planning lawyers explore the role of the trustee and how you can choose one below.
The Role of the Trustee
A trustee will bear the burden of managing the trust and eventually distribute its assets in accordance with its terms. Depending on the exact nature of the trust, the trustee will need to collect the trust’s assets, invest funds held by the trust, pay all bills and settle any debts, file accountings, and manage money for the named beneficiaries. The ongoing nature of many trusts means that a trustee’s duties could go on for potential generations.
Factors That Make a Good Trustee
Naming someone to manage something as valuable and meaningful as your trust is a difficult task. Your first decision will be whether to name a family member as the trustee or a professional. There are pros and cons to either choice. For family members, you will have a personal relationship with them that lends you confidence and trust. Your family member will not charge a fee as they will probably have a personal stake in the success of the trust.
If you elect to name a family member as a trustee, you will want to make sure you name a successor in the event your named trustee dies or cannot otherwise fulfill the role. You could consider naming a co-trustee should the trustee need assistance. Be sure to select a trustee that can handle a fair amount of accounting or will retain the assistance of a professional. Trust is imperative, so name someone you can trust to make wise financial decisions.
Institutional trustees could include banks or a trust management company. These institutions can manage your trust for its entire duration. Professional trust management companies offer a degree of expertise that a family member is unlikely to possess, but their services come at a cost. Expect to pay yearly trust management fees along with a termination fee. For individuals with large trusts who want the funds conservatively managed, or for those without a relative that is up to the task of trustee, a professional may be the best answer.
Choosing your trustee is a crucial decision, so consult with your estate planning attorney for more information. Your attorney can review your individual circumstances to provide you with a better understanding as to who would be best suited to fulfill the role of trustee of your trust.