This is the second in a series of posts on Trusts and Trustees. You can read the first post on Picking a Trustee (here).
Because the role of a trustee or a successor trustee is extremely important to the success of the trust; deciding on the right one person is vital. There are certain overarching criteria that usually make a good trustee.
Key characteristics of a good trustee are integrity and judgment. Trustees will need to weigh the importance of different competing interests of beneficiaries with different needs and trying to determine what meets the settlor’s intent. Trustees also need to be responsible, organized and mature.
Depending on the terms, a trust can last for many years, and being a trustee is a big responsibility. The person being named trustee could take on the trustee role for many years. That means a heavy burden for someone, even if that person is compensated. Overseeing a trust can consume an inordinate amount of time. The duration of the trust also might mean you do not want to name someone may pass on before become successor trustee or maybe too old to the point they do not want to deal with the hassles of being a trustee.
Another question to ask is: does naming this person as trustee makes sense as a business decision? Trustees have investing, accounting, and legal responsibilities. If the potential trustee is trustworthy but does not understand money, he or she may not be the best choice. A trustee can choose to hire professionals for these jobs. The key is whether the trustee will have good judgment in knowing when to seek professional assistance.
Overseeing a trust also requires following numerous requirements. Those requirements include: filing tax returns on time, sending notices to beneficiaries, and keeping up with changes in the law that might alter a trustee’s responsibilities. A potential trustee that does not have time to keep up with the law or hire agents to aid the trust in meeting these requirements might not be wise choice.
In short, the person named as trustee should be the person the client believes is the most responsible person in the trust creator’s circle of relatives, siblings, children or others. That person will follow through with the necessary legal requirements to oversee the trust but also most meet the settlor’s intent in establishing the trust.
The next several posts will go into more issues related to trustees and their powers.