In our previous blog “Choosing a Trustee for a Trust,” we talked about trustee’s duties and responsibilities as well as the trustee options that are available. Now we’ll discuss what are important qualities of a good trustee.
Here are some of the characteristics that you should consider when choosing an individual trustee:
Judgment: You are choosing a trustee to make decisions on your behalf. Does your nominee share your values, virtues, spending habits, and faith? If the trustee candidate doesn’t have accounting or investment experience, would they have the judgment to admit this and engage an appropriate qualified professional?
Availability/Location: Does this trustee candidate have the time required to be a trustee? Will they be available when needed or will work and/or family demands leave too little time for trust responsibilities?
Longevity: How long will the trustee be needed and how old is the potential trustee? Many grantors are most comfortable with friends or family members who share their values and have gained wisdom from life experiences, but someone near the grantor’s age may not live long enough to fulfill the job.
Impartiality: One of the key qualities of a good trustee is they are capable of being impartial among the beneficiaries. This is especially difficult to do if the trustee is one of several beneficiaries. If you feel a conflict is likely to occur between your beneficiaries, a corporate trustee may be a good option because they can be impartial.
Interpersonal Skills: A good trustee will need to be able to work calmly and well with all involved. If the person you are nominating is easily intimidated or particularly overbearing, this can cause strained relations between the beneficiaries of your trust.
Attention to Detail: One of the best qualities of a good trustee is they are a very detail-oriented person. Trustees undertake serious duties and are held accountable for their actions as fiduciaries. A well-organized trustee who can maintain good records is less likely to get into trouble should their authority be challenged.
Investment Experience: A trustee doesn’t need to have investment experience, but it can certainly be helpful. If they don’t, they should be willing and able to engage professional counsel to help them manage the trust’s investments.
Fees: Often, family members and friends serving as trustees will not charge a fee for their services out of a sense of family duty or respect for the grantor. But trustees should be paid for their efforts and should keep close track of time and expenses so that a reasonable fee can be substantiated.
Talk to your trustee choice and make sure they know what being a trustee will involve. Choosing the right trustee is just as important as having a well-drafted trust. Discussing your potential choices with a qualified estate planning attorney can provide greater security to your estate plan and ensure that your trust will function as you intended it to. Contact us today for a free consultation on trust options and asset protection strategies for you and your family.
