Guide to Choosing the Right Trustee for Your Living Trust

If you are creating a trust to protect your assets or adding it to your estate plan, there is an essential question you must consider: Who will you choose as trustee to oversee and manage your trust to protect your financial legacy? Here are some important things to think about when making this decision.

The Role of a Trustee

Selecting a trustee is a significant financial decision. The person you choose will be legally responsible for managing the trust according to its terms and always acting in the best interests of you and your beneficiaries. A trustee’s duties can include recordkeeping, administrative tasks, investment management, and communicating with the trust beneficiaries, who will depend on the trustee for legal knowledge, financial expertise, careful decision-making, fairness, and understanding.

Choosing an Individual Trustee

Picking a friend or family member as a trustee has its benefits. They likely understand your financial beliefs and wishes and are familiar with you and your beneficiaries. The personal relationship they have with you and your family can help them understand your beneficiaries’ needs and your intentions.

However, naming a friend or family member as a trustee may not always be simple. What you see as an honor might be seen as a burden by the person you choose. It is, therefore essential to thoroughly and objectively evaluate whether the individual is both willing and well-suited to be your trustee. Having a daughter who is a CPA or a long-time best friend doesn’t automatically make them the best choice for the job.

Selecting a Corporate Trustee

Serving as a trustee is a serious responsibility, and using the expertise of a corporate trustee can be a smart move. Corporate trustees have significant experience and resources, including knowledge of fiduciary requirements and investment management.

One crucial advantage of a corporate trustee is their unbiased and objective approach. They are detached from personal conflicts that may arise among family members when making difficult decisions related to the trust. Furthermore, a corporate trustee will still prioritize your needs and goals throughout the process of administering your trust.

The downside of selecting a corporate trustee is that Trust Departments experience turnover, and you won’t necessarily know ahead of time who the trust officer will be, and what their relationship with the beneficiaries will be like. In general, corporate trustees will adhere as closely as possible to the trust documents, and that conservative approach can rub beneficiaries the wrong way at times. So there is a different type of risk involved in selecting a corporate trustee, versus an individual.

Selecting Co-Trustees

In some cases, naming co-trustees can be a great option. This means having both an individual trustee and a corporate trustee sharing the responsibilities. Both parties will have a fiduciary duty to you and the trust beneficiaries. You can even give one party more decision-making powers through specific trust provisions.

But on the other hand, if co-trustees don’t get along with each other, don’t maintain good lines of communication, or simply disagree with each other, then things can get complicated fast. If you select co-trustees as your preferred option, you may want to consider appointing a trust protector, as well. At bottom, it’s the difference between choosing a benevolent dictator, versus a committee approach.

Take Your Time

Whatever option you choose, take enough time to carefully consider your choices and explore various scenarios. Picking the right trustee is a crucial part of proper estate planning. Seeking help from a qualified attorney or financial professional can help you make the right choice.

Consult with an Experienced Virginia Estate Planning Attorney

The importance of making an informed decision when it comes to choosing a trustee for your trust cannot be understated. Whether you are considering a family member, a corporate trustee, or a combination of both, it is crucial to assess all your options carefully.

As you navigate this critical aspect of estate planning, our experienced Virginia estate planning attorneys are here to offer guidance and support. Contact us today at (703) 553-2577 or use the contact form to discuss your specific situation and create a solid estate plan that secures your financial legacy and protects your loved ones.

The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.