Part of creating a trust is deciding who will be the trustee of your trust. A trustee has the authority to do what you currently do with your assets: pay bills, invest, save, take care of your family, organize your papers, etc.
The Key Takeaways for Selecting a Trustee
- If you create a trust while you are still alive, you and your spouse can be trustees of your trust.
- If for whatever reason you want or need an irrevocable trust, you will most likely have to choose someone else to be the trustee.
- Someone else may be the best choice to be trustee of your trust.
- The trustee does not need to be family, but can also be a friend, a professional, or a corporation.
- You can choose someone to be a co-trustee with you. This allows them to learn how your trust works, how you want it to work, and you can see if they are a good choice.
Who Can Be Your Trustee
If you create a revocable living trust (the most common trust), you can be the trustee of your trust. If you are married, you and your spouse can be co-trustees. This can not only help strengthen your marriage, but it allows for an easier transition if one of you becomes unable to administer the trust through incapacity or passing away. If you own assets together, being co-trustees is often a good idea.
However, you do not need to be the trustee of your trust. You can choose a family member or friend that you trust, a financial professional (like a CPA), or a corporation (such as a bank or trust company). Doing this does not give you less control over your trust. The trustee still has to follow your trust instructions and report back to you what they are doing with your trust. You can also fire the trustee if you do not like how they are doing things.
When to Consider a Professional or Corporate Trustee
There are many situations in which you may want to use a professional or corporate trustee. You may not trust any of your children, or you may not want a responsible child to have to deal with an immature sibling. Your assets may be enough that you are concerned that your children or a friend cannot handle all your assets. You may feel that your ability to manage your affairs is not enough anymore. There may be many reasons why you do not want an “amateur” to administer your trust.
Again, irrevocable trusts do not let you serve as trustee because you are giving up some control over your assets. In this case, you may want a professional or corporate trustee because they have the time, resources, and experience to more fully accomplish your designs.
What You Need to Know
All trustees can be paid for their time, especially professional or corporate trustees. You want to have that conversation with them to decide if their abilities and expertise are worth the extra expense. In several situations, paying the extra fees are worth the quality of trust administration.
Actions to Consider
- Are you the best option for your trust? Can someone else do a better job if they were your dedicated trustee?
- You may want to consider having a co-trustee. There are benefits to this, such as on-the-job training, preparation, and you can evaluate the job they will do after you are gone.
- You need to be honest and objective as you consider your options, weighing the strengths and weaknesses of your potential successor trustees. This will help you make the decision that is best for your trust and your family.
- If you think that having a professional or corporate trustee is the best option, you should talk with local ones. This will help you compare each of them and ultimately make the best decision.