Your selection of your trustee for your trust is one of the most important decisions when developing an estate plan.  Even if your trust is well drafted, if it is not correctly administered your goals and intentions may not be carried out.  The qualifications you should look for in a good trustee are the following: 

* They will act in the best interests of the beneficiaries

* They know what the beneficiaries need and want

* They are well versed in the subject matter of the trust

* They have the time and ability to serve as trustee

* They have no conflict of interest or have the ability to serve without letting bias influence them

* They are located near the beneficiary

* They are competent in financial & tax matters

* They have appropriate prior experience

Here are some thoughts on who you might select as your trustee:

Family member - Surviving spouses often serve as trustees for marital as well as family trusts.  Many people are more comfortable when they know the trust assets are managed by a member of their own family.  Management by a family member also often eliminates fees that would be charged by a professional trustee.  However, most such persons do not have the necessary qualifications and experience and may be prone to conflicts of interest, but this can be overcome if they are willing to hire legal and accounting experts to assist them.

Friends - A close friend may have a good understanding of what your wishes are but may lack the requisite experience and may not have either the time or energy needed to do a good job.

Lawyers and accountants - People often turn to their lawyer or accountant when choosing a trustee.  A lawyer or accountant who has been a close advisor and friend may be a good choice, provided that person has the necessary skills and experience.  They will charge for their services in their role as trustee.

Corporate trustee - Bank trust departments and independent trust companies are in the business of providing professional trust services to the public.  They have the experience, the expertise and the staff to handle trust management.  They can also be expected to take care of the necessary accounting and tax functions required of most trusts.  The fees charged by corporate trustees may include a percentage of the trust assets as well as annual administration fees and an annual minimum fee.  Ask about the fees before selecting a corporate trustee.  The family members also need to be satisfied that the corporate trustee will work closely to understand their needs.

Because the future is always uncertain, it is wise to build safeguards into the trust so that any problems arising at a later date can be effectively managed.  You should name several successor trustees in case the first trustee is unable or unwilling to continue to fulfill their obligations as trustee.  If a corporate trustee is selected, your trust should provide that the family retains the ability to replace the corporate trustee with another one of the family’s choosing so that if problems arise with the first corporate Trustee, the family has options.  

Sean Sullivan is a shareholder with the firm of Brindley Sullivan, PC 382 S. Bluff, Ste. 150, St. George, UT 84770, (435) 673-9220. 

This entry was posted on Thursday, April 23rd, 2009 at 4:31 pm and is filed under Sean Sullivan. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.