Creating a trust is an effective way to look out for your interests both while you are alive and after you die. But a trust only works as intended if the trustee you choose properly administers it.
There are lots of ways to choose a trustee, and you should consult with an estate planning attorney before making a final decision. While you are considering your options, though, look for the following qualities in your potential trustee.
Most people create trusts to provide for their heirs after they pass. Whether that is tomorrow, 10 years in the future, or 50 years in the future, the trustee needs to be alive and of sound mind when their duties begin.
That typically means you should choose someone younger than you who is in good health. If you are relatively young when you set up your trust, you should probably arrange for backup trustees in case your first selection dies.
You may even want to change the trustee as you age if children reach adulthood and become responsible enough for this duty.
Serving as a trustee is a lot of work, even for a relatively simple trust. Not everyone wants to put in that much time, especially since they probably aren’t being compensated for the effort.
Talk with potential trustees and determine whether they want to take on the obligation.
A trustee has a lot of power and minimal oversight. This means that a dishonest trustee could easily steal from the trust without anyone knowing about it. While you can add safeguards to your trust to prevent that, it is always a good idea to assign a trustworthy trustee.
Typically, one of the main duties of a trustee involves making financial decisions for others. Those decisions are easier if the trustee lives in the same town or state and can easily meet face-to-face, if necessary.
Modern technology allows trustees to do their job effectively from the other side of the planet. But that probably isn’t convenient for anyone unless that person is the only reasonable option.
Most trustees handle large amounts of money in one of two ways. If they happen to have a legal or financial background, they make the decisions on their own. Otherwise, they usually hire a lawyer to help with those decisions.
While the latter is reasonable, it costs money that comes directly from the trust. Typically, it is better to assign a trustee who can make those decisions on their own without having to drain resources from the trust.
In the best-case scenario, a close relative like a child or a sibling is an ideal candidate to act as a trustee for your trust. Unfortunately, family doesn’t always have the qualities you are looking for. By considering these factors, you will find it easier to determine who can be trusted with safeguarding your assets.