What to Think About When Selecting a Trustee

When you’re working on your estate plan, you may decide that establishing a trust is the best course of action. This will require that you select a trustee — someone who administers property or assets for the benefit of the trust creator (you). Since the trustee will be responsible for your assets and have the power to manage them, there are several factors to consider when deciding who to appoint.

Your Level of Trust

It is called a “trust” after all. Therefore, trustworthiness is perhaps the most important quality you should think about when deciding who to name as trustee. This person will be tasked with safeguarding and managing your assets. While they are required to act as a fiduciary, you do not want to be in a position where your trustee is acting improperly. Indiscretions will ultimately cost the beneficiaries money.

Accordingly, you’re looking for someone you know to be honest and dependable. This could mean considering a family member as your trustee. However, it is important not to let family attachments cloud your decision making. Not all loved ones are trustworthy. An estate planning lawyer can explain what to look for when deciding who you should place your faith in as a trustee.

The Level of Financial Knowledge

Being a trustee involves managing the assets of the trust. The decisions the trustee makes will impact the funds of the trust. Depending on the type of trust, investment decisions may be required.

Accordingly, you want to have someone with financial sophistication. This is often a counterweight to choosing a family member who you trust. Your relative may not have the same level of sophistication as an investment professional. However, you must be prepared to pay for the level of knowledge that the professional would bring to the table.

At a minimum, your trustee should have some knowledge of the process and law that surround trusts. They should also be proficient in investment matters and have financial sophistication. You do not want to appoint a trustee who is not capable of properly managing the assets of the trust.

Ability to Work With Others

To manage the trust, your trustee will need to be able to work with the beneficiaries in a productive manner. While decisions are controlled by the terms of the trust, the trustee must keep the beneficiaries informed. This involves periodically engaging with the beneficiaries and explaining what’s going on. Therefore, the trustee should have communication skills and be willing to deal with potentially unhappy beneficiaries. The trustee must also be able to remain impartial because any show of favoritism can end up putting them in legal jeopardy and interfere with their ability to manage the trust.

At the same time, the trustee will also need to work with financial professionals to receive the best advice for the trust.

Consider Hiring a Professional

Of course, a family member could meet all the necessary requirements of being a good trustee. However, this is usually not the case. For a relatively small price, you can hire an experienced professional to be your trustee. There are certainly reasons to make either choice, but you should at least give some thought to paying someone who knows exactly what they are doing in this area.

Depending on the amount and nature of the assets in the trust, serving as the trustee can involve a significant time commitment that a family member may not be able to make. There are both large and small duties involved, and the trustee needs to perform all of them to do their job. While someone may be family and trustworthy, it does not necessarily mean that they can be successful as a trustee.

When you need to name a trustee, an estate planning lawyer can help. With legal assistance, the estate planning process could go much easier. Call The Knee Law Firm of Hackensack, NJ, at (201) 996-1200 to get the help you need.