Many times clients ask, “Who should I select to serve as my Trustee? Should I name a family member, a local that has a trust department or a professional financial advisor?” By nature a trust is a financial instrument that is created to last many years for the benefit of certain people. Due to a trust’s longevity it is very hard to predict how the laws or investment strategies will change over the duration. Therefore, it is to the advantage of the trust maker to select a trustee who will provide the quality supervision you intend when establishing the documents.
In some cases the trust maker will serve as the trustee to his or her own trust. If you have a revocable trust, and serve as the trustee, your service ends upon your own incapacity or death. If you create an irrevocable trust then you must usually name someone to serve as a trustee. Therefore, it is reasonable to conclude that no matter which trust you form, at some point in time, a person other than yourself will have to serve as trustee.
A trustee has several responsibilities. The main responsibility is to interpret and carry out the trust maker’s instructions. Such interpretation should be done impartially and without any conflict of interest. Some other responsibilities include:
· Addressing the needs of the beneficiaries
· Holding assets of the trust in a secure manner
· Preparing accountings for the trust
· Maintaining detailed records
· Complying with tax laws/filing returns
Since there is a great deal of responsibility and commitment that goes along with a trust, you should select a trustee that you have confidence will provide the level of service needed in order for your trust to function properly. Sometimes a single individual might not have the time commitment to properly address all the needs of your trust. A local bank may be subject to certain state regulations which do not offer the best environment for investing or reporting the trust assets, or worse still, the local bank may go through several mergers. A professional trustee in another state may have more favorable regulations, but may not be in touch with your wishes due to a lack of local connection.
Individuals, local banks, and professional trustees all have good and bad qualities when it comes to trust administration. Your ultimate trustee determination relies most upon your confidence that the person or entity chosen will best comply with your wishes.