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NC and SC Estate Planning and Elder Law Firm

Thursday, June 16, 2016

How to Name a Trustee

What are the obligations of a trustee in managing an estate?

A well designed estate plan often requires putting a revocable trust in place which can help to avoid probate and specify how your beneficiaries will receive the assets. Once the trust is established, you will be named as the trustee so that you can continue to manage your assets during your lifetime. However, you will also need to designate a successor trustee who will be tasked with managing your financial affairs in the event you become incapacitated or distributing assets to your beneficiaries when pass away. Because of the obligations associated with managing a trust, it is essential that you name an individual who will be able to act in your best interests and manage the trust according your wishes.

 A Trustee's Obligations

A trustee's duties are determined by the terms of the trust agreement as well as state law. First, a trustee has an obligation to administer the trust in good faith, exercise skill and care in administering the trust and act in the best interests of your beneficiaries. Because a trustee has duties of loyalty, fairness and impartiality, his or her interests cannot conflict with the beneficiaries. The trustee must also make decisions that consider each beneficiaries interests. Finally, a trustee must invest and manage the assets prudently, keep records regarding the administration of the trust, and provide information to the beneficiaries as the trust agreement requires.

Selecting a Trustee

In order to ensure that your wishes are fulfilled, it is essential that you select a trustee who will exercise good judgment. The fact that a trustee will be making investment and distribution decisions means this individual should have some investment experience or the ability to work with, and monitor, a financial advisor. Selecting a trustee is also often influenced by family dynamics, so the trustee and the beneficiaries must be able to work together.

Because a trustee has some discretion over whether to make distributions, he or she must also be aware of any special needs or circumstance of a beneficiary. A trustee must also be able to act fairly, and make decisions that are in the best interests of all the beneficiaries. Finally, a trustee should have the necessary skill sets to manage the trust - he or she must be detail oriented,  highly organized and be able to communicate effectively. In the event that you cannot trust an individual to fulfill role, a bank or other business fiduciary can be selected as your trustee.

As with any other decision about estate planning, it is also a good idea to engage the services of an experienced trusts and estates attorney who can prepare the appropriate trust document and advise you about selecting a trustee.


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