Making most of the decisions regarding your trust may not have been terribly challenging. More than likely, you already had some idea of who to name as the beneficiaries, along with how and when distributions would take place.
Then, it came time to decide who would administer your trust. This decision is the one that you may recognize carries a significant amount of importance for the futures of your beneficiaries. If you choose the wrong person, all of the work you did to provide for your beneficiaries could be in vain.
What will your trustee do?
In making your decision, you probably need to have at least a rudimentary understanding of what duties a trustee undertakes. This information may help narrow down your list of possibilities. Trustees perform the following duties, at a minimum:
- Carry out and adhere to the terms of the trust
- Bring in specialized assistance as needed to preserve the trust’s assets
- Make investment decisions
- Communicate effectively and efficiently with the beneficiaries
- Make distributions in accordance with the trust terms
- Keep detailed records of trust matters
- File all required tax returns
- Provide information regarding trust assets to beneficiaries
Choosing an individual to serve as trustee
Perhaps you decided that you want an individual to serve as the trustee instead of a corporation, in order to add a personal touch. You may need to be aware of some of the advantages and disadvantages of choosing a close friend or relative:
- Understands the family dynamic
- Easily influenced
- Lower costs of administration
- Work and family obligations could interfere in administration
- Aware of each beneficiary’s needs
- Better able to evaluate and respond to beneficiaries
- May need the assistance of third parties
- May only serve as trustee of your trust
You may also want to consider whether the individual you choose will serve when the time comes or continue serving after accepting the responsibility. Of course, you may also appoint a successor trustee to account for this possibility. In fact, you may want to talk to the person you consider choosing before you rule anyone else out, since he or she may not want to do it.
Another major concern is trustworthiness. While it’s important that you trust the person you want to appoint, your beneficiaries may need to trust this person as well, since they will be working with him or her after you pass away. If they don’t know each other well, you may want to introduce them in advance to make sure they at least know each other ahead of time.