090: Choosing a Trustee – How to Get It Right

It goes without saying that trustworthiness is the number one trait you should think about when you choose a trustee for your estate plan.  Is the person going to do the job? Are they going to do the job right? Are they going to put the needs of the trust, estate, and other beneficiaries first? We know it’s a lot to think about, and honestly, there is no correct answer when it comes to choosing your trustee or trustees because every family is different. While it may also seem logical to name your child or children as trustees, this route can also come with its own complexities and concerns. As parents, the last thing you want to do is cause your family stress or unhappiness should you become incapacitated or pass away.

In this episode, Kirsten Howe and Madison Gunn talk about the factors to consider when naming your children as trustees, and some of the other more neutral options to think about, depending on your estate. Some of the points they cover include:

  • Why you might want to choose two separate trustees; one if you become incapacitated, and another if you die.
  • The personality traits that are important to consider in your trustee selection.
  • Why splitting the trustee duties between two children equally may or may not be the right decision.
  • When it might be suitable to hire a neutral third party to carry out your trust plans, such as a licensed professional fiduciary or a corporate trustee.

And more.

Carrying out a trust plan after its owner becomes incapacitated or dies is a big responsibility that takes much more time and effort than many realize. It’s important to make sure the person you select will be able to do so fairly, in a timely manner, and with minimal friction alongside your other beneficiaries. Whether you’ve already selected a trustee for your plan or you’re just getting started, this is an episode that every family should listen to. You may want to update your plan after you hear what Kirsten and Madison share.

Big Three from Episode #090:

  1. The trustee(s) you choose should be trustworthy, reliable, and ideally local in order to smoothly execute the instructions in your trust.
  2. If you do select your children as trustees, or any family members, make sure to communicate the details of your trust in advance to avoid complications down the road.
  3. Sometimes, it just makes sense to choose a neutral trustee, such as a licensed professional fiduciary or a corporate trustee.

Time-stamped Show Notes:

0:00 Introduction

1:35 Who should be the successor trustee of a trust? This is a question that Kirsten and Madison often receive when helping someone set up an estate plan.

2:54 In a standard revocable trust, you are the trustee. If you die or become incapacitated, the person you’ve named to handle your trust becomes your successor trustee. But sometimes, your choice may vary depending on what happens to you. Start listening here to learn why.

4:43 What are some of the most important traits to look for in a trustee? Trustworthiness is a big one. Press play now to hear some of the other characteristics that are required.

7:41 Serving as a trustee can be quite a bit of work—almost a part-time job at times. With that in mind, here are some points to consider when choosing the best candidate based on your family’s needs.

9:53 There are a number of different kinds of people who can serve as trustees. Tune in here to find out who they are.

11:03 It might seem logical to name multiple children as trustees, but there are several factors to consider about how realistic this option may be. Listen here as to why it might not always be the right decision.

16:18 You should never name one child as a trustee and have them manage another sibling’s money in an ongoing situation, as this rarely ends up well.

17:38 Sometimes, it’s recommended that a third-party person be named as a trustee. In California, a licensed professional fiduciary, or professional trustee, can handle this task. Learn more about what they do by tuning in here.

21:57 The cons of having a professional trustee are that they tend to be older or inexperienced, both of which people don’t like when choosing a trustee. How can you find the right one? Tune in here to find out.

23:08 Make sure your trust has a way for another fiduciary to be appointed if the first becomes unavailable. Learn why here.

24:39 To learn more about professional fiduciaries, or to find one, visit www.pfac-pro.org.

25:49 Another neutral option is a corporate trustee, which is usually a bank. Find out more about the pros and cons of this option by tuning in now.

31:26 Q&A If the document names two trustees, can one resign to make it easier?

32:06 Q&A How much does a licensed professional fiduciary cost?

33:08 Q&A What if parents name only one child as the trustee and that child really doesn’t do the job correctly. What can be done about that?

35:19 Q&A What happens if a husband loses capacity before his wife establishes a trust or a power of attorney, and they have no children. What should the wife do?

Resources/Links Mentioned in this Episode:

[AD] The job of a trustee isn’t as easy as one may think. You must give legal notices, retitle assets, file tax returns, understand a legal document, and perform a variety of tasks most people find unfamiliar. As a trustee, if you forget a step or make a mistake, you could be held liable. Protect yourself, have a plan, and find out the next steps about your specific trust. Get started now by scheduling a 20-minute discovery call with Absolute Trust Counsel. During this introductory call, we will gather information about your trust administration, review our trust administration process with you, and answer any questions you may have. Our goal is to help you get the job done right!

Your Trust Administration Guide

Let Us Help You Navigate the Process with Ease and Get the Trustee’s Job Done

Trust administration is a long and detailed process requiring much more work than many people know or understand. And if you miss a step or make a mistake, you could be held liable. Download a copy of our Trust Administration Flyer for more information on our roadmapping session and how to get started.