Selecting a trustee to manage trust property is a big decision, and it is important to make the right one. Because acting as trustee requires a significant amount of time and some knowledge of tax law and money management, not everybody is fit for the task.
In addition, trustees need to have the ability of approaching the task objective and fairly. Not everybody is capable of that. Whether chooses an individual or a bank or trust is another important question.
Here are some further factors to consider in selecting a trustee:
The size and complexity of the trust assets is an important consideration. Corporate trustees are not cheap when compared to the average selection of an individual trustee. Trusts involving less than $50,000, generally speaking, should probably be handled by an individual trustee, while those above this amount may do better with a corporate trustee. We say "may" because even trusts exceeding $50,000 of assets don't necessarily require professional management. More complex trusts-for example, those lasting multiple generations, may do better with professional management.
The possibility of a family member acting as trustee is something to consider. Selecting a family member can offer the benefit of utilizing somebody who feels strongly about the success of the trust, but the family member would also have to act impartially, according to the trust instructions, as well as skillfully in administration of the trust, at least in knowing how to find the right professionals to help.
In our next post, we'll continue looking at this topic, specifically the relationships between beneficiaries and the possibility of having multiple trustees.
Source: Wall Street Journal, "A Matter of Trust," Jeanine Skwronski, September 10, 2012.