San Diego Estate Planning: How to Choose a Trustee?

From the desk of Del Mar Estate Planning Attorney, Kristina Hess (serving California)

Sam and Sally of Rancho Santa Fe, California are setting up an Estate Plan and the first question they have is, ” how do we choose the right trustee to manage our living trust?”

I am glad they asked and you may also be asking this question… How do we choose?  What does a trustee do?

Should I have a family member or a professional fiduciary?  Should it be the same person as my guardians?

Many of the answers to these questions will depend on your specific situation and your potential trustees, but here is some additional food for thought…

One of the most important, and sometimes difficult, decisions you will make in setting up your estate plan is the choice of trustee.

You want to choose people to handle your estate that you trust to carry out your wishes and represent your best interests.  You may think your cousin Billy is the greatest guy on the planet, but he may not be the best choice to take care of your estate.

To help you make the right determination, it helps to understand exactly what a trustee does and what you should consider in choosing him or her.

First, Let’s Define “Trustee”

The term “trustee” is bantered around quite a bit and is sometimes used incorrectly.  A trustee is a person given the power to manage the assets that you title in the name of your Revocable Living Trust or any other trust agreement. A trustee can be an individual or an institution, such as a bank or a trust company.

What Should I Consider When Naming a Trustee?

Serving as a trustee for someone’s Living Trust is a big responsibility and can be very time consuming.  You want to make sure that you choose someone who is up to the task.  When choosing your trustee, consider the following character traits:

Loyalty and a Sense of Fairness – If your trustee is named to take care of you and your affairs if you’re disabled, you want them to be loyal to you and take care of matters in the way you would want.  If they are to continue to take care of your estate after your death, you want them to be fair to your beneficiaries.  Your successor trustee must be fair minded enough to treat all your beneficiaries equally and protect all their interests in administering your trust.

Trustworthiness – Is the person you’re thinking of naming as a trustee someone you would trust with your money or even your life?  Remember, when you die your trustee could possibly be handling large sums of cash and property.  Is this someone you would trust to invest the money well and sell your assets wisely?

Practicality – Common sense is a very valuable character trait when it comes to administering an estate.  Make sure your nominee is able to make practical decisions both when it comes to your care if you’re incapacitated and to your estate when you die.

Organized – We’ll pick on Cousin Billy again.  If he hasn’t balanced his own checkbook in 10 years and has a stack of bills permanently situated on his kitchen table with no clue what is or isn’t there, you may want to rethink naming him as a trustee.  The person you name needs to be organized so that trust account balances and all bills, invoices, and other documents are handled promptly and properly.

Tough – You don’t want to name someone as your trustee who is terminally unpleasant, but you definitely want someone who is tough-minded and strong willed enough to fend off greedy beneficiaries, deal with all the red tape involved in administering a trust and anything else that you just can’t plan for in advance.

Who Do You Have To Choose From?

To help you narrow down the pool of potential trustees, bear in mind that only adults can serve.  That means they must be over the age of 21, although in some states the age of majority is 18.

Also, depending upon the type of fiduciary nomination, your family and friends may or may not be eligible.  In most cases, your family members will be allowed to serve as trustees, but that depends on the type of trust you’re establishing.  Check with us to make sure that your friends and/or family are not excluded from serving as trustees before you nominate them.

Some restrictions also apply to the naming of professional advisors, people who are not citizens of the United States, and some institutions.

And, as always, if you decide on someone to serve as your trustee, discuss it with them before you put them in your estate planning documents and make sure they understand exactly what they’ll be undertaking.

If you would like some skilled counsel on the appropriate trustee for your particular circumstances, call us to schedule your Family Wealth Planning Session today.  We can help you ensure that you make the right decision in choosing someone to carry out your wishes.

Also, as part of our estate planning process, we will interview you about your specific wishes and what you want your family to know.  We provide you with a copy of the interview so you can pass on the information you want your family to remember.  We understand that it’s not just about the paper you leave behind, but your voice and your values that you express as part of your legacy.  Our Family Wealth Planning Session is normally $750, but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge.  Call today and mention this article.

Create Legacies that Last,