Choosing a trustee for your trust is a big decision. There’s a lot of work involved in administering a trust after a person has died, and a lot of responsibility. For some clients, choosing that poor unfortunate soul is the biggest hurdle to moving forward. To make things a bit easier for you, here are answers to some of the most frequently asked questions I hear on the subject.
Should I Choose a Family Member or a Professional Trustee?
There are pros and cons to each way. A family member would probably be more familiar with your assets and financial situation when choosing a trustee. They would also be more invested in making sure your wishes are carried out. And if you choose wisely, there will also be a level of trust there (no pun intended). On the other hand, this is all completely new to them, so they are bound to make mistakes along the way. And if there are any bad feelings between your trustee and the other beneficiaries, then arguing and headaches are a very likely part of your trustee’s future. In the worst cases, the beneficiaries may sue the trustee for any mistakes, real or perceived.
On the other hand, a professional trustee (who is frequently a licensed fiduciary or attorney) very rarely gets sued by beneficiaries, partly because there’s no preexisting emotional relationship, and partly because they generally make fewer mistakes. They’ve done this rodeo before, so they’re aware of what needs to be done and they know how to do it properly. The most frequent reason my clients balk at choosing a professional is that a professional will certainly pay themselves out of the trust for their services, while a family member is less likely to do so.
In the end, which one to choose comes down to personal preference. The most important thing is that the person you choose is trustworthy and good at handling money – because if they don’t handle their own money well, they certainly won’t handle yours well either.
Can I have more than one person as a trustee?
Absolutely! You can have as many trustees as you want. Just bear in mind that the more people you have in charge of the trust, the harder it will be to get anything done because they’ll have to agree on each decision and collectively sign each document. In addition, make sure your trustees get along and are capable of working together – if they can’t stand to be in the same room with each other, forcing them to work together is not going to improve the situation.
Does my trustee have to live in the same state as me?
No, there’s no rule that requires your trustee to live in your state. However, it will be more difficult for them to administer the trust when they’re in one state and your house and other assets are in another. Travel and time zone changes add hassle to an already difficult job, so someone closer might be a better choice.
Should I ask them before I name them in the trust?
While it’s not legally required, I highly recommend it. It’s a lot to ask of someone, and they should be able to decide if they want to take that on. In addition, they have some time to mentally prepare themselves for the job.
If there’s a question that I missed, you’re welcome to ask me at firstname.lastname@example.org