A Fiduciary Duty: Who Should You Appoint Trustee?

You’ve built economic security during your lifetime through hard work and diligence. As you prepare your estate plan, you will likely utilize a combination of wills and trusts to minimize the burden of estate taxes, ensure your privacy and deliver hard-won assets to your named beneficiaries. In order to manage trust assets, you must appoint a trustee.

Part of your estate plan will likely be the creation of a revocable living trust. Your will may also include the creation of an irrevocable testamentary trust. During your lifetime, you can remove a trustee from a living trust. When you pass away, so does your opportunity to modify the terms of the trust and your choice of trustee.

The appointment of your trustee, and a back-up trustee, for these important financial agreements should be considered both a personal and professional choice. While you can dictate the terms of a trust agreement, it is up to your trustee to ensure your wishes are appropriately carried out. Considerations for your choice of trustee include:

*Friend or financial institution: An institutional trustee — like a bank, brokerage or trust company — will likely use a trust committee to manage assets and monitor payments made by the trust. Well chosen institutional trustees provide sound financial expertise to manage your affairs when you no longer can. A close friend or business associate can also be named trustee and rely on advice from an institutional advisor.

*Family member: A spouse or adult child is often named trustee. Naming a family member may eventually put that person at odds with other family members if unpopular trust decisions are needed to carry out your directions.

A trustee has a fiduciary responsibility to manage the assets you accumulated over a lifetime to the benefit of your loved ones. When making a trustee appointment, speak with your potential choice about his or her willingness and ensure he that or she has the financial capability and understanding of probate issues to carry out your wishes.

When establishing your estate plan, or for help administering a trust, seek experienced legal advice.