Trusts are key components of an effective estate plan. To ensure that a trust meets your objectives, it’s important to have trust documents and instructions prepared by experienced, reliable professionals. An equal amount of care should go into selection of the trustee – the person charged with managing the trust and preserving its assets for your loved ones.
Here are several points to consider in choosing a trustee:
A trustee should be honest and trustworthy and should possess the financial skills and experience to handle investments, tax, and valuation issues, etc. He or she should have a good relationship with your family members and other beneficiaries.
In many cases, you can act as a trustee of your own trust. If you do, however, consider appointing a co-trustee who can take over in the event you die or become disabled.
Family members make good trustees because they’re trusted and usually don’t require fees. On the other hand, they may be less objective and may lack the requisite expertise. Consider appointing a family member and a professional as co-trustees. This allows you to take advantage of the professional’s expertise as well as the family member’s understanding of the family and the needs of the beneficiaries.
Corporate trustees, such as banks and trust companies, offer several benefits: they have extensive experience in investment, tax, and estate administration matters; and they’re in the business of managing trusts.
Unlike individual trustees, corporate trustees can’t die or become incapacitated, so they have the advantage of continuity. Some people are uncomfortable appointing someone they don’t know as a trustee. The solution may be to appoint a corporate entity and a family member as co-trustees.
