Choosing a trustee is one of the most critical decisions in creating a trust-based estate plan. A trustee manages assets, adheres to your trust’s terms, and serves your beneficiaries’ best interests. Here are key factors to guide your selection process.
- Competency and Impartiality
Select a trustee with the expertise to manage complex assets and the ability to remain neutral. They must balance family dynamics, especially in blended families, and make impartial decisions without favoring one beneficiary over another. For example, a trustee must fairly handle distributions between a surviving spouse and children from a prior marriage.
- Continuity and Succession Planning
Your trust may span generations, so plan for trustee continuity. Naming successor trustees or a corporate trustee ensures long-term stability if an individual trustee can no longer serve. This avoids costly court interventions and maintains your vision for the trust.
- Administrative Skills and Time Commitment
Trust administration requires organizational skills, attention to detail, and time. A trustee must manage records, coordinate with professionals, and handle paperwork for banks or tax filings. Choose someone who can dedicate time to these tasks without being overwhelmed by personal or professional obligations.
- Managing Complexity
Consider your family dynamics and asset portfolio. A trustee must navigate intricate family relationships and manage diverse investments, such as real estate or closely held businesses. A corporate trustee or co-trustee arrangement can provide expertise for complex portfolios while addressing family needs.
- Avoiding Conflicts of Interest
A trustee must prioritize beneficiaries’ interests, avoiding conflicts like using trust assets for personal gain. For instance, appointing a family member who is also a beneficiary may lead to biased decisions, so evaluate potential conflicts carefully.
- Local Knowledge and Accessibility
While not mandatory, a trustee based locally can simplify tasks like managing physical property or meeting with advisors. Out-of-state trustees may face logistical challenges, so ensure they’re prepared for potential travel or coordination.
Weigh these factors carefully to choose a trustee who aligns with your estate planning goals and ensures your trust is managed effectively for your beneficiaries. At Kelleher + Holland, LLC, we guide our clients through this process to align their trust with each family’s unique goals.