Choosing a Trustee you can Trust

Margerie LawChoosing a Trustee you can Trust

Every family’s estate plan looks a little different, but one element that benefits most people is the creation of a trust. Trusts (sometimes called a “Living” or “Revocable” trust) is a method of estate management and transfer that allows beneficiaries to receive assets while avoiding probate and potentially reducing estate tax costs.

One of the major decisions you will make when setting up a trust is who to name as trustee. Here at Margerie Law, I love helping local families navigate the complicated world of trusts and estate planning. Read on for my answers to common questions about choosing a trustee.

What are the responsibilities of a trustee? 

As the name implies, a trustee is a person you choose to oversee the administration of assets contained in a trust. A trustee must undertake significant responsibilities in executing this important role, including:

  • Administering the trust according to instructions laid out in the trust document
  • Managing distribution of assets from the trust to its beneficiaries
  • Making investment decisions on behalf of the trust in a prudent and responsible manner
  • Ensuring tax returns on the trust are completed and filed correctly and on-time
  • Making all decisions with the long-term benefit of the beneficiary in mind
  • Remaining impartial when settling disputes and avoiding conflicts of interest

Another element to consider is that a trustee is responsible for administrating a trust document not only after you pass away, but in case you become incapacitated and unable to manage this yourself. A living trust is the only way to plan for and outline your wishes for this (hopefully unlikely) scenario. Should this occur, the trustee would be responsible for managing all property contained in the trust.

What makes someone a good trustee?

While a trustee doesn’t need to be an expert in estate planning law, experience and knowledge of certain topics is important, including:

  • Tax and trust law
  • Investing
  • Accounting

A trustee should also have a strong moral character. This means they are trustworthy, honest, and able to remain impartial and objective in the face of competing interests.

Because there are many different types of trust, the person most appropriate to fulfill the duties of a trustee in one situation may not be appropriate in another. For example, a special needs trust provides for the lifetime care of a special needs beneficiary, so the trustee of that account needs to be able to take on the additional duties and considerations of providing for the best interest of the special needs beneficiary. It may also be necessary to name a successor trustee in the event that the trustee passes away before the trust document instructions can be fulfilled.

When thinking of who you would name as trustee, you may consider a family member or friend. In certain situations, this may be the right choice, but you want to make absolutely sure they understand the responsibilities and have the characteristics and abilities outlined above.

Another option is to engage a financial or legal professional as a trustee. They will likely have the expertise necessary to fulfill the duties of the role. If your aim is to avoid paying a fee, consider that the amount of work for anyone who is a trustee is enough to warrant some amount of compensation. Not wanting to pay is not a good enough reason to avoid enlisting the help of a professional. As is true with many other things in life, you often get what you pay for when it comes to choosing a trustee!

I’m Paul Margerie, a passionate estate planning attorney who loves helping families in Milwaukee, Brookfield, Elm Grove, Waukesha, and surrounding communities plan for their future. If you are looking for an estate planning attorney, estate planning advice, a trust attorney, or simply a person to answer your questions about wills, trusts, and powers of attorney, I’m your guy. Give me a call to get started today.