NHEH Publications

Who Should Be Trustee of Your Trust?

By Rob Simpson

Attorney, Noland, Hamerly, Etienne & Hoss

Selecting a trustee is arguably the most important decision you will make in creating a trust. Many people appoint their oldest child, or all of their children jointly, as trustee without giving it much thought. However, choosing a trustee should be well thought-out, not merely a reflexive exercise. Unlike an executor under a will, a trustee of a living trust does not by default report to the probate court (in most cases). With such broad power, an irresponsible trustee can do a lot of damage before the beneficiaries discover the damage and hold the trustee accountable by filing a lawsuit.

Selecting the right trustee requires you to understand what a trustee does. A trustee’s duties include 1) locating, identifying, and securing all of the trust’s assets, 2) valuing those assets through appraisals or other means, 3) changing title to the assets, 4) selling assets, 5) complying with the law regarding various notice requirements, 6) following the terms of the trust when dealing with debts, taxes, and distributing the trust, distributing and/or disposing of furniture and other household items, and 7) keeping a detailed records of all transactions to account for all of the trustee’s actions.

The above list of trustee duties is not exhaustive, but makes it clear that handling the administration of a trust after a death (or during a person’s incapacity) is a big job requiring certain attributes and skills. Consider the following when identifying who will serve as your trustee:

  1. The trustee is local.  If not local, he/she is willing to make as many trips as necessary to complete the trust administration.
  2. The trustee is impeccably honest and trustworthy.  Preferably, the trustee is educated and sophisticated about money management.  Ideally, the trustee is financially abundant and so unlikely to misuse or “borrow” money from the trust.  The trustee has no drug, alcohol or gambling problems, no criminal record and no domineering spouse/partner who might interfere with the trust administration.
  3. The trustee is able to read and understand the trust, your financial statements, and other important documents.
  4. The trustee is organized and good with numbers.  The trustee is willing to set up an adequate filing system.
  5. The trustee is willing to consult with an attorney and a CPA to insure that actions taken are correct and appropriate, and he/she is willing to ask for help and follow direction.
  6. The trustee has a good relationship with the trust beneficiaries and no history of family conflicts that might erupt after the death.
  7. The trustee does not procrastinate unnecessarily.  The trustee is not over-extended with work or family obligations and he/she has sufficient time to devote to the trust administration.

You will greatly increase the chances of a smooth trust administration after your death if you select a trustee with these traits. If you cannot identify anyone with these traits, there are trust companies and professional fiduciaries available to serve as your trustee. Also, make sure to re-evaluate your choice for trustee every few years as circumstances change. 

This article is intended to address topics of general interest and should not be construed as legal advice.

© 2018 Noland, Hamerly, Etienne & Hoss