Choosing the right trustee is extremely important because this decision can ultimately affect how efficient your trust will be in the future. It will affect your beneficiaries, who are often people or entities that you care about deeply. Choosing an ineffective trustee can ultimately undermine your goals in setting up your trust. You should look for the following characteristics in any individual that you are considering for your trustee.
Integrity and good judgment
There will be many competing interests in your trust. Your trustee should be able to balance these interests in a way that will benefit the beneficiaries and ensure the longevity of your trust if that is your ultimate goal. Of course, this role requires a great deal of integrity because recipients may be unable or unwilling to perform an additional check on whether the trustee is fulfilling his or her obligations. Using someone you can trust is absolutely vital.
Ability to take on the responsibility
Trusts can last for many years, so being a trustee is a long-term commitment. It can be a heavy burden for anyone, even if you arrange for him or her to have compensation for their services. Being a trustee of a complicated trust can take significant time and effort as well. You should be sure that your administrator is not likely to pass on before the beneficiaries, or you need to set up a successor trustee. It is a good idea to speak with the potential trustee to ensure that he or she is up to taking on this responsibility.
Business savvy or experience
Some trusts require additional financial or investment knowledge to carry out the purposes of the trust. Some trustees also have legal responsibilities as well. The trustee either needs to understand these concepts on his or her own or be savvy and responsible enough to engage a competent professional for help. If the trust involves a business, it may be a good idea to include a trustee that has similar business experience.
Ability to follow instructions; detail-oriented
The trust document will lay out all of your specific wishes and desires for your trust. It will require a close read and careful eye to ensure that all of your instructions are carried out to a tee. Therefore, being detail oriented and willing to follow instructions is essential for the person in the trustee role.
Good communication skills
One of the responsibilities of the trustee is to communicate with the beneficiaries. He or she must provide periodic updates and information, and respond to any inquiries. If the trustee does not have good communication skills or does not get along with the beneficiaries, this communication requirement could be a problem. Sometimes having a trustee that has a good relationship with the recipients can be helpful.
The Trustee’s Duties in Trust Administration
A trustee is considered to be fiduciary which means that they are in a position of trust with the beneficiaries. As a trustee, it is important to follow the highest ethical standards. A trustee can also be held responsible for any mistakes or misconduct. Trustees are required to act in the best interest of beneficiaries and preserve the value of trust assets.
The duties of a trustee may include letting the beneficiaries know of the grantor’s passing, making an inventory of the properties in the trust, and arranging for an appraisal of the assets in the trust. Aside from those, a trustee may also be expected to obtain tax ID numbers for the beneficiaries, file estate tax returns, and accounting as well as distribute the assets in the trust.
The trust assets’ value will determine how complicated it is to administer a trust. For trusts with large assets, income and principal may need to be separated according to the trust terms. In some cases, only income may be distributed initially to one beneficiary, while the principal will be distributed later to that beneficiary or another beneficiary. A spouse inheriting the estate may receive income while the trust holds the principal only for medical or other emergencies.
As a trustee, it is important that you are dependable and capable of administering the trust properly. There may be cases where conflicts will arise between the beneficiaries. The trustee will have to step in and find ways to solve the problem.
Choosing the right trustee will require some thought and foresight. Trust attorney Christine Matus and our team can help you work through these requirements and others to find the trustee that will work best for your unique situation. Call us today at (732) 281 – 0060 or contact us online for a consultation.