Choose a trustee very carefully. A properly funded trust is one of the best tools for ensuring your hard-earned assets go where you want. Trusts are an excellent option for keeping funds safe from outside sources, as well as avoiding the lengthy and costly probate process after your death. You know best where your money, property, and heirlooms should go, which is why a trust is important to keep the courts and creditors out of the equation. There is an element of the process is that often overlooked, however. Selecting an appropriate trustee to handle administration is just as important as setting up the trust in the first place.

Why You Need the Right Trustee

The job of a trustee is to follow your wishes and enforce any terms you’ve laid down in a trust. In some cases, you will oversee your own trust, such as if you’ve set up a revocable living trust to protect assets while you are still healthy and of sound mind. There are circumstances where that isn’t a workable option though, and it is important to plan ahead for health or financial changes. 

In the event you are incapacitated or otherwise unable to oversee your own trust, you will need a qualified trustee chosen ahead of time. In general, you are looking for someone who shares your overall values and thoughts on finances. Additionally, ask yourself these questions about a potential trustee:

  • Would you trust this person to have access to your bank account or to hold your wallet full of cash?
  • Are they up to the challenge of accepting the legal responsibilities of trust administration? 
  • Can they make potentially difficult decisions about dispersing funds to family members they know?
  • Can they commit the time required to run your trust?
  • Does the person have a basic understanding of economics and finances?
  • Would they take undue risks in investing your assets?

In short, you need a trustee who is capable of making unbiased decisions in the best interest of the trust and has a workable knowledge of handling funds. In some cases, the best choice may involve going with a professional administrator rather than someone you personally know.

Deciding Between an Individual or Corporate Trustee

When considering the right individual to take on the fiduciary responsibility of overseeing a trust, many people immediately think of a family member, close friend, or business associate. That may not always be the right option.

Trust administration can be a time-consuming process and may end up being more work than a family member is expecting to undertake. While selecting a loved one is often a less expensive option, you may want to go a different route.

When setting up a trust, it may be better is to hire an independent, neutral third party with financial experience and no attachment to any of your family members. This is typically more expensive, but often worth the cost to avoid problems. 

A hired corporate trustee avoids sensitive issues while overseeing the trust, like sidestepping any potential appearance of favoritism. Unfortunately, it is all too easy for conflicts between family members to spill over into a trustee’s decisions. This is particularly true of situations involving irrevocable trusts where assets are going to children from multiple marriages, or if you have disabled children with special needs. 

While a family member can end up in a difficult and awkward situation if they need to decline dispersing funds to a beneficiary they personally know, a corporate trustee is more likely to make fair and balanced decisions.

If you end up selecting a family member or personal friend, that person will likely need to work with your attorney to ensure they know all the legal ramifications of taking up the role of trust administrator.

Do You Have Assets That Need Protecting? Contact Our Experienced Asset Protection Lawyers Today

Thinking of creating a trust and not sure who to select as the trustee? Begin a quick consultation with Legacy Lawyers to get help deciding who will work best for your specific financial and family situation. We will work hard to offer peace of mind and help you keep what you’ve earned safe no matter what life throws your way.

John J. Peck
Wilmington Elder Law, Estate Planning & Asset Protection Attorney