We Listen.

Selecting a Trustee- What Matters?

Who Do You Trust?

Choosing a trustee requires an appropriate balance between kinship or friendship, expertise and technical knowledge.

As a trust attorney one challenging aspect of my practice is the very personal decision by a client about choosing a trustee or trustees (and their substitutes) for his or her many types of trusts.

There are testamentary trusts (which are those set up under the provisions of a will) and irrevocable life insurance trusts which are funded now or upon the death of the person who created the trust, known as a settlor. My client/settlor has to choose successor trustees to take over their role as trustee after they die. My client may have an irrevocable trust that is funded during the client’s lifetime that will also need a trustee or trustees appointed.

My goal as a trust attorney is to arm my clients with enough information to make the best possible choice for trust positions for their particular situation. For example, when a client chose only family members or a friend with no professional experience to manage a trust or even a large “dynasty trust” which can go on for generations without being forced to terminate by state law, I needed to explain to the client what the consequences are of having inexperienced family members for this large and long lasting trust. Furthermore, there are tax and asset protection problems when the trustee is a related party.

A trust could have a trust board composed of family and professionals. Some jurisdictions even permit different trustees to have different responsibilities like handling investments or working with the beneficiaries and approving trust distributions. A trust could have a “family trustee” and an “independent trustee”. And the independent trustee can be an individual or a bank or trust company.

Clients are often fearful of losing control which is inevitable when delegating such important decision making roles to others. To mitigate some of these fears trust language can direct the trustees as to the settlor’s wishes, or through a less formal “Letter of Wishes”. But these things may unduly burden the trustee and become counterproductive. No one is able to predict exactly what the future will hold so you can’t draft for every contingency so it comes back to selecting the right trustees.

Being asked to be a trustee may feel like an honor but it involves a great deal of work with little or no compensation and the risk of legal exposure. Settlors must choose someone who understands these considerations and is willing to do it.Professional trustees have the training and knowledge necessary to serve and are usually licensed but may lack an understanding of the settlor’s wishes. A lay trustee has the ability to hire professionals such as lawyers, accountants and financial advisors to assist in meeting their fiduciary obligations.

Selecting a trustee is complicated but if you are concerned about your wishes being respected and your beneficiaries being treated well it is essential to do it right. For information about updating your wills and trusts and who to select as a trustee call 610-933-8069 and ask for attorney David M. Frees, Douglas L. Kaune or Whitney O’Reilly.

By: Estate and Trust Attorney’s David M. Frees
Unruh, Turner, Burke & Frees Attorneys At Law

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