Selecting your trustee is one of the most important responsibilities you will have as you set up a trust. However, while you may be inclined to select a family member to act as the trustee, it is important to consider the advantages and disadvantages, the responsibilities of your trustees, and how trustees work before you make such a decision.
Fortunately, when you have a Missouri trust attorney at The Law Office of David S. Schleiffarth, LLC working for you, you can get the legal support you need to make an educated and informed decision.
What Is A Trustee?
Your trustee is the person you will select to be responsible for the assets you hold within a trust. You can think of them as a manager or administrator of the assets within the trust.
The trustee will be responsible for making important decisions based on the instructions included with the trust. You have the authority to set these instructions to ensure your trusty acts in your best interests should you no longer be able to do so due to incapacity or death.
Trustees are different from guardians in that guardians are generally assigned to take responsibility of minors, while trustees are responsible for handling the instructions and contents of a trust.
Types Of Trustees
There are several types of trustees, including immediate successors, successor trustees, and corporate trustees. Immediate successors are the trustee you assign to handle the administration of your trust. However, if the immediate successor does not want to accept the authority, they have the right to resign from their position as immediate successor. If this happens, or the immediate successor passes away or becomes incapacitated for some reason, the successor trustee will take the immediate successor’s place.
As part of your estate plans, you may also want to include a corporate trustee or institutional trustee to act as a co-trustee with your immediate successor or successor trustee. In instituting a bank trust department or other professional fiduciary to act as a co-trustee, you can help protect the assets within your trust and ensure your instructions are going to be carried out.
Furthermore, despite the fact that there may be additional costs in appointing corporate code trustees, the contents of your trusts will be protected by insurance in the event of a mistake or other investment. This is a benefit you might not get if you choose to appoint a family member to act as the lone trustee.
Duties and Responsibilities Of a Trustee
Successor trustees have money responsibilities as trust administrators. You can select family members, friends, adult children, and professional or corporate trustees to act as the administrators of your trust.
However, before you make your selection, it is important to understand the duties of a trustee so you can make an informed and educated decision. Some of the most common types of responsibilities your immediate successor should be prepared to handle include:
- Refinancing or selling property
- Maintaining your bills
- Ensuring you receive the medical care you need
- Pay any final debts upon your passing
- Taking an inventory of property and accounts upon your death
- Distributing property and accounts according to your trust instructions
- Preparing final tax returns
Although your trustee does not necessarily need to know the exact decisions that need to be made at any given time, it is important that they have some understanding as to what your instructions are and what will be expected of them should their duties take effect. It is always a smart idea to get an attorney, financial advisor, or other professional to work as a co-trustee to help guide your immediate successor.
How Often Do Trustees Report to Beneficiaries?
When you are considering who to select for your trustee, it is important to remember that you will need to select someone who is capable of communicating with your beneficiaries. The last thing you want is to have a trustee in place who gives the impression that they are taking advantage of you or their responsibilities as a trustee.
Although trustees are not legally required to report to beneficiaries, selecting a trustee who will continue to update your beneficiaries as to the status of your trust administration, notify when there are going to be delays, and give updates regarding the distribution of assets and property can help to ensure beneficiaries and trustees are working well together.
Characteristics Of The Right Trustee
As you work with your trust attorney to select the right immediate successor for your trust administration, there are certain characteristics you might want to consider. Some of the top traits of a trustee you can rely on include:
- Financial experience, including investing
- Experience in business
- Financially responsible
- The ability to work well with beneficiaries
- Good organization and record-keeping skills
Arguably the most important thing to consider is whether you can trust your appointed trustee to follow your instructions as laid out. For this reason, it may be wise to consider appointing a co-trustee in addition to your mediate successor trustee.
Additionally, before you appoint a successor trustee, make sure you discuss your decision with your potential trustee. It is possible that your desired trustee does not want all of this responsibility. You should also be prepared to compensate your trustee accordingly for the efforts and responsibilities they will handle on your behalf.
How to Select A Trustee
You have the right to choose whoever you would like to as your immediate successor trustee, successor trustee, and co-trustees. These are often family members or close friends who work alongside professional institutions such as attorneys, accountants, and financial advisors.
Successor trustees do not typically need court approval before making decisions regarding your estate. You will need to be sure you can trust your trustee with all of your major decisions, trust accounts, assets, and property.
Other things to consider as you are deciding who to select as your trustee include:
- Can your trustee be trusted to treat beneficiaries impartially?
- Will your trustee put their own personal feelings aside to follow the instructions in your trust administration documents?
- Will your trustee have enough time to serve their role adequately?
- Does your potential trustee have financial or investment experience?
- How likely is it your trustee will make risky investment decisions?
- Does your trusty understand your instructions?
- Is there any resentment among trustees and beneficiaries?
In going over the details of your trust administration plans, you can rely on your attorney to go over additional considerations that may pertain to the specific and individual circumstances of your case. You can also discuss any questions or concerns you might have in selecting a trustee, including any potential issues that may arise, with your trust attorney.
Who Can You Select As Your Successor Trustee?
You have the right to choose whoever you would like to as your successor trustee as long as they are 18 years of age or older. However, most people choose adult children, friends, family members, and professional trustees to handle the administration of their trust.
Here are some of the do’s and don’ts of selecting your immediate and successor trustee:
- Work with a professional financial institution or co-trustee, such as a money manager or financial advisor
- Choose a trustee who is prepared to handle your estate for decades or longer
- Choose an immediate successor trustee who will be available and capable of handling the trustee responsibilities
- Name a successor trustee to act if the immediate trustee becomes incompetent or decides to resign
- Choose a trustee that will put your health and desires first
- Choose a trustee who understands tax and state trust laws, or will hire the appropriate authorities to help them make educated decision
- Choose a trustee who won’t crack under pressure
- Choose a trustee who can be impartial in their decision making
- Compensate your chosen trustee
- Choose a trustee who has financial problems
- Choose a trustee who has no experience with investing
- Choose a trustee who cannot be impartial with your beneficiaries
- Choose a trustee who is disorganized or has poor record keeping skills
- Choose a trustee with a conflict of interest
- Choose a trustee who will mishandle your assets
Should You Use a Family Member As a Trustee?
It is difficult to say whether you should use a family member as a trustee. There are many advantages and disadvantages to choosing a close friend or family member to take on such a big responsibility. Before making a decision, be sure to discuss the specific pros and cons with your trust attorney in Missouri.
Advantages Of Using A Family Member As a Trustee
There are many benefits and advantages to going with a family member to act as your trustee. Your family members and friends are more likely to have a better understanding of your personal wishes and the instructions you laid out in your trust.
Your family members may also be willing to administer your trust without payment, which can be cost-effective, particularly if you choose not to work with a professional co-trustee.
Disadvantages Of Using A Family Member As a Trustee
However, there are also many disadvantages to selecting a family member who will act as your trustee. When you select one family member, other family members may become upset. If this particular family member is incapable of being impartial with other beneficiaries in your trust, they may not be the best choice as your immediate successor.
Family members may not have the experience or knowledge of trust administration to successfully handle your trust instructions. If they make mistakes and are not working with professional code trustees, they may also face legal issues with other beneficiaries.
You might also make the mistake of choosing a family member who simply does not have the time or availability to handle the administration of your estate. If they are unable to do so and are not willing to delegate the responsibilities, it can hold up the distribution of trust assets, which can cause strife among beneficiaries.
Strife and conflict between trustees and beneficiaries is one of the most common issues you will want to avoid as you decide who to appoint as your immediate successor. It may be in your best interests to choose someone who is not going to abuse their power or get caught up in family drama. You want to choose a successor who will treat your beneficiaries equally and follow the instructions of your trust.
How a Trust Administration Attorney Can Help
Having a trust administration attorney on your side could be in your best interests if you are having trouble deciding who should act as your immediate successor trustee. Since there are multiple trustees to assign, having a trust administration attorney working with you can help you consider the facts when making this decision.
We can also help you figure out whether appointing a financial advisor, money manager, or other professional co-trustee is in your best interests. Doing so be more costly, but it could also help to protect your trust instructions and your family from additional stress when the assets are distributed to beneficiaries.
Having trust oversight also gives you an opportunity to protect your beneficiaries from taking distributions too quickly, preventing conflict between beneficiaries who do not get along with trustees or successor trustees, or there are considerable assets or sums of money involved in your trust.
When you are unsure of who to select as your trustees and need legal guidance and support you can rely on, having a trust administration attorney analyze the specific circumstances of your case could be the answer you have been looking for.
Get Help From a Missouri Trust Attorney Today
You need to be able to trust and rely on your trustee to act in your best interests and protect the assets within your trust. Now that you have a better idea of the traits and characteristics your trustee should have, making your decision should be a little easier.
However, if you find yourself still unsure as to who you should appoint as your trustee, be sure to reach out to an experienced Missouri trust attorney at The Law Office of David S. Schleiffarth, LLC. Schedule your initial consultation as soon as today by filling out our secured contact form or calling our office.