Spouse, Friend, or Colleague? Naming your Trustee

After you have decided that you should have an estate plan drawn up, you will begin the seemingly daunting task of naming individuals to serve as certain roles in your plan.  You will name trustees, guardians, executors, powers of attorney and beneficiaries.  This task is not as daunting as it seems.  If you choose responsible individuals suited for the specific roles, you can rest assured that your estate plan will be followed without too many problems.

One of the important roles you will be filling with the name of a friend, family member, or even a professional person is the name of the successor trustee of your trust.  The successor trustee is the person who will be responsible for managing the trust if something should happen to you.  Managing the trust may involve simply dividing the assets among the beneficiaries or it may involve keeping certain assets in a trust for the benefit of young children.  The successor trustee is responsible for investing the assets placed in the trust, interpreting the terms of the trust, making distributions to the beneficiaries, keeping detailed records, potentially filing reports with the court, and filing tax returns, among other duties.

Legally, the successor trustee cannot take personal advantage of the trust assets; he must follow the rules of the trust and not steal or mismanage assets.  Selecting someone who is honest and trustworthy will ensure that there will not be questionable behavior on part of the trustee.  In selecting the appropriate successor trustee, you will want to consider their age, any health problems, mental competency, and their ability to deal with managing money and assets.

You have the option to name multiple trustees to act at the same time.  However, if you do name co-trustees, you should be aware that in acting for the trust, all of the trustees must agree, make decisions, and sign documents together.  Sometimes this can be difficult or even impossible.  The best way to avoid problems is to name a single successor trustee with alternate names if the primary choice is unavailable.

If you do not know of a friend or family member who would make a great trustee, you always have the option to name a professional corporate trustee.  Some corporate trustees require the trust to be of a certain value before they will serve, however.

If you are cognizant of the role the successor trustee and you make your decision carefully, there should be little problems down the road.  If you need guidance on whom to select as successor trustee, you can talk to a professional, such as an estate planning attorney to help you in your decision making process.

By Shirley M. White, esq.