What are some qualities to look for in a trustee?

What are some qualities to look for in a trustee?

| Aug 1, 2020 | Estate Planning

If you are setting up a trust for your children or grandchildren, it is natural to want somebody that will be entirely loyal to your family to serve as trustee. Choosing a trustee, however, is more than just looking for a loyal person. You also want someone with the knowledge and competence to oversee the trust.

Having the right expertise is crucial. A trustee who lacks the proper knowledge or experience could result in your children not receiving the assets that you intend for them to have. Kiplinger explains the kinds of qualities a trustee should have.

Competence at financial matters

The duties of a trustee are going to vary depending on the responsibilities you place on the person who will handle your trust. You do not need, for instance, to name a financial professional as a trustee if the tasks are simple and do not include duties like investing trust assets.

Still, your trustee may still have to handle duties like tax planning and filing taxes. Your trustee should know how to protect the trust assets. Your trustee will also have to distribute the assets according to your wishes, which may be more complicated than it seems.

When to say no to beneficiaries

Sometimes a person that is personally close to a beneficiary might not take the best interests of the beneficiary into account. To take one example, your trustee might be a good friend to your child. If your child starts having problems with money, like wasting too much on bad spending or on manipulative friends, your trustee might indulge your child instead of refusing to spend trust money on poor spending decisions.

In cases like this, your trustee should be able to stay emotionally removed from your child enough to fulfill your wishes. Your trustee should also recognize what is in the best interests of your child, not necessarily what your child wants at the given moment.

Hiring multiple trustees

You might not have to choose between a person experienced in financial matters and a person loyal to your family. It is possible to select two parties to act as co-trustees. Some people pick a corporate trustee such as a bank while also choosing a family member to give the corporate trustee opinions and input. Depending on the terms you name in the trust, the two trustees may act in concert or one trustee may have sole authority to make decisions while the other acts in an advisory role.