Choosing a trustee is a decision that you should not take lightly, as it is one of the most important decisions surrounding your trust planning process. The duties of a trustee can vary and deciding on one can put some pressure on your shoulders, especially if you don’t know where to start.
What is a Trustee?
A trustee is a person that is responsible for the assets that are presented within the trust. This includes managing and distributing the funds of a trust. In the event that the trustee passes away or can not fulfill their role, then a successor takes over. The most important part of being a trustee is acting in the best interest of the trust, as well as following the guidelines that are presented by the deceased.
Beneficiary vs Trustee
If you are looking into the estate planning process, you may have come across the terms beneficiary and trustee. These two roles are quite different. The beneficiary will benefit from the trust to some capacity. The trustee holds a responsibility to hold and manage that trust, meaning they are in charge of distributing assets to designated beneficiaries.
What are The Responsibilities of a Trustee?
A trustee will have varying responsibilities. You will outline the responsibilities of your trustee in a document. It is the trustee’s duty to carry out what is written down and outlined by you. A trustee’s duties could also change over time. Some of these responsibilities may include:
- Act as fiduciary. When a person is designated as a fiduciary, this means they are held to a standard to act in the best interest of the deceased by protecting assets and investments. A trustee should take their role seriously.
- Make ongoing decisions. Trustees should feel comfortable and be able to make decisions that are in the best interest of the trust.
- Filing your trust’s tax return and keeping track of tax forms. While this is imperative come tax season, it is also important year-round. This also includes keeping track of all other financial transactions and statements.
- Investing and overseeing your assets. This should be done with the intention of preserving assets for the current and foreseeable future.
- Communicating and answering beneficiaries’ questions. Trustees will have to communicate with beneficiaries by providing them with reports, statements, and account information. They should also be available to attend to questions or concerns to the best of their ability.
Skills You Should Look for in a Trustee
Skills you are individually looking for in a trustee may vary, depending on your own unique needs. However, you will want to consider how skillful this individual you are considering is before you have them be tasked with this responsibility, as it may have a significant impact on your beneficiaries. Some skills you should consider when deciding on a trustee include:
- Time Management. Managing a trust can involve a significant amount of time. So, the trustee will need to be committed to managing their time appropriately in order to complete what needs to be done for the trust. When considering a trustee, think about if they will be able to dedicate the necessary time or will be able to in the future.
- Due to how many responsibilities are required of them, trustees will need to be very reliable, as this will help the distribution of the trust go smoother. An unreliable trustee can lead to issues accumulating.
- You will want to select a trustee that has great organizational skills. Your trustee will have to keep track of different statements, paperwork, and accounts. They will also need to be organized enough to be able to relay this information appropriately, as well as assist your beneficiaries.
- Choose a beneficiary that is not only trustworthy, but will act in your best interest and the best interest of your beneficiaries. Your trustee will be legally bound to act in the best interest on your behalf with no personal gain on their part. However, you will want to ensure that your trustee will not have personal internal conflict or bias that could become an issue for your beneficiaries.
Questions to Consider
If you are having trouble deciding who your trustee should be, these questions might help you narrow down your options.
- Can your trustee analyze investments?
- Is your trustee likely to give in to temptation, which could lead to them taking a risk at the expense of other beneficiaries?
- If they are your spouse that remarries or your child, will they be able to have good judgment?
- Will they have the time to devote to serving as a trustee?
Should I Choose More Than One Trustee?
Each individual situation is unique and therefore requires varying considerations. However, sometimes those who draw up trusts find it beneficial to have more than one trustee. This allows the responsibilities to be spread out across multiple different people that may have different strengths. A trust agreement that is created properly will have the duties for the trustee or trustees discussed. This means that delegations can be split up among two or even more people. However, careful consideration will still need to be made, even when spreading out responsibilities. This could still lead to conflicting interests and miscommunications.
Speak to Professional California Estate & Trust Planning Attorneys Today
Choosing a trustee is an important decision for your estate and trust planning process. While imperative that it is done carefully, it does not have to be a challenging task. Speaking with a professional can help ensure that you cover all your bases when you are considering who to choose as your trustee.
At Galanti & Copenhaver, we are equipped to help you with the ins and outs of the estate planning process. We understand that estate planning for your future can be complicated and overwhelming, especially if you are not familiar with the process. Our dedicated team of professionals will walk you through the process of selecting a trustee, eliminating this burden off of your shoulders. Call our team today to schedule an initial consultation.