estate planning

Guidance on Choosing the Right Trustee (or Trustees) for Your Estate

From a spouse or child to a bank or lawyer, you have several options to consider when selecting a trustee for your estate. To help make your decision, here are some questions to answer.

You know how hard you have worked and the sacrifices that have been made to achieve your goals. In order to protect what you have worked for and provide for the most important people in your life, you may be counseled to put some or all of your assets into a trust.

Once you have decided to fund a trust as part of your succession planning, you then need to determine who can best carry out your plans. “Who do I choose as my trustee or trustees?” becomes a critical planning question.

Should my trustee be my spouse or child?

Only you know the strengths and weaknesses of your family members, putting you in the best position to decide if your spouse or your child can appreciate a trustee’s

responsibilities.

Being a trustee creates many duties under state law. These include, but are not limited to, impartiality between the interests of the current and future beneficiaries, properly accounting to all beneficiaries and prudently investing trust funds. Trustees also face a prohibition against self-dealing.

Questions to consider:

  • Can your trustee separate his or her personal feelings and interests from those of the beneficiaries and exercise good judgment at all times?
  • Will all parties be treated impartially if your children are not your spouse’s children?
  • Does your trustee have an ability to analyze investments?
  • Will there be temptation for your trustee to take risk hoping for a hefty return at the expense of the other beneficiaries?
  • What if your spouse re-marries?
  • Will a child who is trustee be able to exercise good judgment when a sibling is a beneficiary, or will tension develop between them?
  • Can your sons-in-law and daughters-in-law and their children work peacefully  together?
  • Will a child who is balancing his or her family and career have adequate time to devote to serving as trustee?

Should my trustee be my attorney, accountant or other trusted adviser?

Attorneys, accountants and financial advisers often have a special and trusted relationship with their clients. When looking for a person who understands a client’s financial and personal goals and the person most capable of carrying out estate or other financial plans, many look no further than these trusted professionals. However, just because an attorney, accountant or other adviser may understand the nature of your business or your financial goals, he or she may not fully appreciate the scope of fiduciary duty or inherent risks and responsibilities of being a trustee.

Questions to consider:

  • Does your professional adviser understand the dynamics of your family?
  • What experience does he or she have as a trustee?
  • Can he or she separate his or her personal financial interests from those of other clients?
  • If there is a breach of duty that results in a significant financial loss to the trust, will your beneficiaries be willing to rely upon the trustee’s ability to personally satisfy a judgment if professional malpractice coverage will not make the trust whole?

Should my trustee be a bank or trust company?

Banks and trust companies provide professional fiduciary services and can act independently. Corporate trustees have procedures and systems in place to manage property and invest funds in a fair and consistent manner. Choosing a professional fiduciary may reduce conflicts among family members while providing experienced and professional investment and administrative management. All fiduciaries are held to a very high standard, and this is truer for corporate fiduciaries because we are in the business of providing fiduciary services.

Questions to consider:

  • How much of the trust assets will be spent on fees and be unavailable to my beneficiaries?
  • Should increased investment returns provide value for the fees charged?
  • Will the bank or trust company understand my family or their needs?
  • What can I expect from the administrator making decisions that directly affect my family or realizing the goals of my trust?

What are the advantages to choosing more than one trustee?

You may find it best to answer some of these questions by choosing one or multiple individuals to serve as trustee alongside a corporate trustee. It can be helpful to have more than one trustee in order to balance recordkeeping, investments and other trustee duties.

A properly drafted trust agreement can expressly outline the duties of the various trustees, such as the retention of specific investments, delegation of particular duties or removal of a trustee. An individual co-trustee may have a particular understanding of a beneficiary’s needs and assist the other trustees and/or corporate trustee in making discretionary decisions.

Choosing a trustee is a decision that should be well reasoned, but it doesn’t have to be difficult. You are in the best position to understand the responsibilities of managing the wealth that you have worked hard to attain and preserve over your lifetime. You are also best able to understand the needs and abilities of those closest to you. It is worthwhile to consider the person or people who, when working together, have the knowledge, experience and compassion to best shape your legacy.

About the Author

James J. Ferraro, JD

Vice President/Legal Counsel, Argent Trust Company

Jim Ferraro is a vice president and trust counsel in the Shreveport, La., office of Argent Trust Company. Ferraro is a 2003 graduate of the University of Missouri at Kansas City School of Law, past president of the family and the law section of the Kansas City Metropolitan Bar Association, and is a member of the Tax and Estate Planning Council of Shreveport.

Most Popular

5 Beaten-Down Stocks to Buy on the Dip
stocks to buy

5 Beaten-Down Stocks to Buy on the Dip

The market has delivered some nauseating volatility of late. The good news? That has teed up a few great stocks to buy at a discount.
September 27, 2021
10 Best Stocks for Rising Interest Rates
stocks

10 Best Stocks for Rising Interest Rates

The 10-year Treasury yield is hovering near its highest level in months. Here are 10 of the best stocks to buy in a rising interest-rate environment.
September 30, 2021
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
October 4, 2021

Recommended

6 Things You Can Do Right Now to Ensure Your Money Will Last in Retirement
retirement planning

6 Things You Can Do Right Now to Ensure Your Money Will Last in Retirement

Your retirement plan needs to take a holistic approach. Because there are so many decisions to make, it’s easy to get lost in the weeds. Follow these …
October 15, 2021
7 Things You Can Do Now to Prepare for Medicare’s Annual Enrollment Period
Medicare

7 Things You Can Do Now to Prepare for Medicare’s Annual Enrollment Period

It’s that time of year again: Time to see if there’s a Medicare option that better fits your needs – and your budget. Don’t delay. Here’s where to sta…
October 14, 2021
Yogi Berra Quotes Investors Can Live By
investing

Yogi Berra Quotes Investors Can Live By

Baseball legend Yogi Berra was wise, in his own muddled way, about more than just sports. His words hold truth in life – and in investing. Here are th…
October 13, 2021
Ditch Your Dying Career for a Dirty Job Instead
careers

Ditch Your Dying Career for a Dirty Job Instead

How secure is your job in a world of artificial intelligence? Technology is putting many careers on the endangered list, but some jobs just can’t be d…
October 12, 2021