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How do you pick the right trustee?

On Behalf of | May 27, 2021 | Estate Planning

Whether you want to start a trust so that you can qualify for Medicaid if you need it later or provide financial support for a family member with special needs, the trustee you choose is of the utmost importance.

The trustee will have authority over the assets in the trust and likely control over their distribution to the beneficiaries. Although they have a fiduciary duty to act in the best interest of the trust and its beneficiaries, trustees can make mistakes or violate that duty, diminishing the value of the assets you used to fund the trust.

How do you determine whom you should name as trustee?

Look at their experience and availability

For someone to be a good trustee, they need to have experience with financial management. Even if they have simply managed their own household, this can be sufficient reason to trust their abilities for the administration of the trust, although more formal financial work can also be beneficial.

You need someone who is organized and intelligent enough to handle complicated assets. Being able to manage the trust is only one consideration. You also need someone who has the time to commit to trust administration.

The more assets you set aside in the trust and the longer you expect it to last, the greater the time commitment for the trustee. Their age can also affect availability. If they will likely die before you, it could mean that you will eventually need to name another trustee or have a succession plan in case they die while the trust still requires administration.

Look at their personal ethics and communication skills

The way someone behaves in their personal and professional life can help you decide if they would make a good trustee. If they have a history of dishonesty, it could be a sign that they may not be a good choice.

The same is true of those who struggle to treat others with respect and dignity. You need someone who has interpersonal skills and a strong sense of morality so that they don’t use their position for personal gain. Once you think you have the ideal candidate selected, you also need to speak with them. Their willingness to serve as trustee is also crucial.

The process of selecting the appropriate trustee can be as important as using the right language when creating a trust as part of your estate plan.