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Thursday, May 19, 2022

Who to Choose as Trustee

To establish a trust, the trustor, the creator of the trust, transfers assets into the trust and appoints a trustee to manage the trust for the benefit of the beneficiaries. Trusts can be established for a number of reasons, including probate avoidance, and have many benefits. If you are looking to include a trust in your estate plan, you will need to choose a trustee to manage that trust. In the cases of a living trust, the trustor will often serve as trustee for their lifetime, but will still need to appoint a successor trustee to manage the trust after they pass away or otherwise step down from their role as trustee. It is an important decision and you may not know where to start. Here are some considerations for when you have to choose a trustee.

Who to Choose as Trustee

There are many different types of trusts and each have unique purposes and may require different factors to take into account during the trustee selection process. Special needs trusts, for instance, often benefit from a trustee who has a knowledge of federal benefits programs. The beneficiaries of special needs trusts are often recipients of such benefits and the trustee may be best served by being aware of how trust implications may impact, or even jeopardize, the continued receipt of critical government benefits.

Generally speaking, however, a trustee need only be 18 years or older and able to manage their own affairs. Beyond that, it is up to the discretion of the trustor to select an appropriate trustee that meets this basic criteria. It is a sound idea, however, to first consider the role and responsibilities of a trustee prior to making your trustee selection.

The trustee is responsible for managing and executing the trust according to the terms set forth in the governing trust document. As such, the trustee carries the responsibility for managing the assets held within the trust, which can include anything from real property, to securities, to other financial accounts. In fact, the trustee has sole legal authority to sign for and manage trust property and assets. Furthermore, the trustee will do the banking and pay the bills as well as make appropriate distributions from the trust to the trust beneficiaries.

Mismanagement of a trust or failure to uphold the duties of a trustee can not only result in a trustee being personally liable for resulting damages, but it can also work to thwart the very purpose of why the trust was established in the first place. This is why you will want to select a trustworthy and responsible person to serve as trustee. Does this person have sound judgment? Are they organized? Are they committed to doing a quality job? These are important questions to ask.

You will also likely want to consider a trustee who is willing and able to serve in the role for an extended period of time. Turnover in trustees can be complicated and destabilizing for the management of the trust. This is not to mention that choosing a successor trustee can be a hassle in and of itself. Consider selecting a trustee who can serve in the capacity into the foreseeable future.

Estate Planning Attorney

For assistance in the creation and set up of a trust that will best serve your goals, the team at Monk Law is here for you. Contact Monk Law today.


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