Choose the Best Trustee to Handle Your Estate
As estate attorneys, we cannot emphasize enough how important it is to name the proper administrator to handle your will and/or trust. The administrator of your will is called an executor, while the administrator of a trust is called a trustee. And, while naming the administrator is essential, it is even more beneficial to name the person in your life who will best handle the job.
This is not necessarily your eldest child or any of your children. It may not be your spouse (if you’re a blended family) or your favorite niece.
What does the trustee do?
This following is a list of tasks a trustee may need to do. Reviewing it will help you understand why choosing the right trustee (and successor trustee) is so important:
- Comply 100% with trust‘s terms unless they are impossible, illegal, or unconscionable
- Manage and protect the trust assets until they are distributed
- Monitoring trust investments
- Prepare and pay taxes
- Investing trust funds using the “Prudent Investor Standard“
- Communicate with trust beneficiaries
- Resolve conflicts that arise between beneficiaries
- Make discretionary decisions
- Distribute trust funds to beneficiaries after all taxes, fees, and debts are settled
- Approve or deny distributions if given discretionary authority
- Maintain detailed trust records
As you can see, that takes a special person. Even the closest of families can surprise you with the fights, arguments, and falling outs that occur when a will or trust is finally disclosed.
5 Key Factors When naming a Trustee (and successor trustee)
Simply put, the best trustee for the job is the person who:
- Keeps a calm, cool head in the presence of heartache and stress
- Has a sound business sense
- Does not procrastinate
- Can stand firm in the face of dissension should anyone balk at your estate plan’s instructions
With that in mind, here are five key factors to consider when choosing a trustee:
S/he should be financially sound
There may be costs associated with handling the trust that is not immediately available via the trust‘s assets. In this case, the trustee must pay out of pocket, knowing s/he will be reimbursed from the trust. This means s/he should be financially sound.
Is the individual able to keep a cool head?
Who is the family member who is the best at remaining Switzerland (i.e. neutral) in the midst of a family disagreement? Who maintains strong personal boundaries and is able to say, “No,“ even to someone s/he loves or under pressure? This is the kind of person who should be serving as a trustee.
Trustees often find themselves in tense or sticky situations such as withholding funds from a beneficiary known to be an irresponsible spender or having to uphold a trust’s instructions even when a favorite child or niece, “swears“ that the decedent promised them something that the estate plan has given to someone else. It‘s not an easy job.
Paperwork, organization, and deciphering business verbiage is no problem
Being a trustee requires organization, record keeping, and filling out forms, bookkeeping, bill paying, and other (often tedious) executive tasks that must be performed by deadlines and in a timely fashion. This is not a good job for those who are procrastinators, who are known for not paying bills or for paying them late, or who can‘t keep their personal records straight.
Understands basic finance governance
The trustee is responsible for managing the assets, finances, and investments until the estate is fully settled. If there are a respectable amount of finances, properties, and/or liquid assets associated with the estate, it is best to name a trustee who understands basic financial practices, investments, etc. to protect the estate.
when naming a trustee also name a successor
In a perfect world, adults would revisit their estate plans on an annual basis. Deaths, divorces, changes in family roles, children who grow from minors to adults – all of these can alter the original intention of an estate plan. Additionally, a niece-named-trustee, known for her business acumen, may pass away before you do. If you haven‘t named a successor trustee to take the original trustee‘s place, it‘s as if you never named a trustee at all.
Meeting with an estate lawyer to create or review your estate, and discussing who might be the best person to be named as your estate‘s trustee is one of the most important decisions you‘ll make in your lifetime.
We’re Ready When You’re Ready
Contact us here at Tseng Law Firm to discuss your concerns about naming a trustee and we’ll be happy to help you through the process.