The trustee (or trustees) is someone who will manage your money and property if you become incapacitated (living will) or for the benefit of others after you pass.
The trustee has a lot of authority, so it’s important to select someone you not only trust and have great confidence in, but also:
- Makes smart financial decisions
- Is responsible
- Can meet deadlines (ex. paying bills on time and filing taxes)
- Has a healthy relationship with your family
- Is good at communicating as many decisions and ongoing conversations will need to occur.
Trustees are most often a family member or an institution. Following are some benefits and disadvantages to both:
Perhaps the biggest benefits of selecting a family member as a trustee is that they may not charge you a fee to be the trustee and most likely, they have a good understanding of how your family works and what it needs.
However, on the flip side, if you choose a family member to be the trustee it could lead to conflict or resentment especially if there is a separate guardian involved for a minor child or disabled adult. Further, the family member may not have financial prowess and may need to hire someone to help them.
Finally, the family member could become incapacitated, get divorced or pass away. As a result, if you select a family member as a trustee, it’s important to name a successor trustee.
If you choose a bank or financial institution as the trustee, there is stability (it most likely won’t die) and more likely financial acumen than a family member. The bank can handle any investments, tax preparations, management, and accounting of the trust’s finances. Further, the bank is regulated by federal laws and uninvolved in family politics.
The downside of naming a bank or financial institution as a trustee is cost. Sometimes banks have a minimum fee. This may make banks cost-prohibitive for small trusts. Further, while the bank may not die, employees at the bank can change frequently making it difficult to build relationships.
Still Not Sure?
Choosing the right trustee is an important decision and can be stressful as there are many factors to consider. However, an experienced estate planning attorney can help you determine whether a family member or an institution will be the best choice for you based on your wants and family’s needs.
We’re Here To Help
DJ Jeyaram is an experienced estate planning attorney who specializes in helping families create trusts – including identifying the best trustee – to meet their needs and situations.
You will work directly with DJ in creating a will or trust that reflects your family. DJ can be reached at DJ@JeyLaw.com or 678.325.3872.