How do I select the trustees and successor trustees?
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UPDATED: Jul 15, 2021
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A Trustee is a person or institution selected to follow the instructions provided by the declaration of Trust or Trust agreement, the document that sets up the Trust and says how the Trust assets are to be handled and distributed. (Trust assets are also called the Trust corpus, Trust estate, and Trust principal.) A Trustee has a very high “fiduciary duty” to act with the utmost good faith in dealing with the Trust estate. The Trustee must always act for the benefit of the people the Trust is set up to serve, not for his or her own interests.
Many Grantors (also called Creators, Donors, Trustors, and Settlors) and their respective spouses act as the initial Trustees of a revocable Living Trust. In this way, they remain in control of their property until they are incapacitated or die. The Declaration of Trust also appoints successor Trustees or sets out how they are to be appointed. The successor Trustees take over at the time of incapacity or death. Usually a spouse, family member, or trusted friend is selected as successor Trustee.
Trustees should be knowledgeable about financial matters, be trustworthy, know how to manage and invest the Trust estate, care about the Beneficiaries of the Trust, and have the financial capacity to reimburse the Trust in the event that they make serious mistakes. If a bank or Trust company is selected to serve as a Trustee of a Trust, it will usually charge a fee for this service, which is then paid from the Trust estate.
It is possible to name more than one Trustee, so you can use both an individual, such as a family member, and an institution, like a bank. The advantages of using a family member or a friend as a Trustee are that the person will usually serve without a fee and may have a personal interest in your affairs and in your Beneficiaries. The disadvantages of using a relative or friend are that they might not be fully qualified to do all that’s needed, other family members or Beneficiaries might be resentful and feel left out, and there may be possible conflicts of interest if the Trustee is also a Beneficiary. Institutions are generally qualified and keep up on changes in the law, but they are also expensive and have no personal interest in your family or other Beneficiaries.
You should choose your Trustee(s) based on the purpose of your Trust. If you want a Trustee to oversee the distribution of assets to minor children and young adults, you will want someone who will be sensitive to the Beneficiaries and who cares about them. If the only purpose of your Trust is to avoid taxes, you might want to choose the Trustee with the best investment experience. If you want both qualities, you might appoint Co-Trustees.