When people create trusts, they must appoint trustees to own and manage the assets in the trusts. Grantors must consider the capabilities of the appointees and the legal responsibilities required of trustees when deciding who to appoint.
The following tips may help grantors make these important decisions.
Decide between someone familiar or a third-party
Grantors can choose anyone they want to be a trustee. Many turn to friends or close family members because they are familiar with them. However, sometimes people create trusts to keep assets away from family members. In these cases, grantors can choose attorneys or corporate trustees instead. The trade-off is that professional trustees may cost more than friends or family members.
Consider the trustee’s ability to make hard decisions
When grantors create trusts, they determine how trustees manage assets. Sometimes trustees must limit fund distribution to prevent overspending by beneficiaries, withhold funds to avoid unauthorized purchases or make one beneficiary’s request a priority over another. These decisions are difficult to make, especially when trustees are family members. Grantors should choose a trustee who can make these decisions without emotional influence.
Choose a backup trustee
To ensure consistency with trusts, grantors should always select successor trustees. If trustees become incapacitated, abandon their position or die, the management of the trust transfers to the backup trustee. When grantors do not choose alternate trustees, or all chosen trustees are no longer available, the courts can appoint new trustees. If the courts make these decisions, the result is not always someone the grantor would have wanted.
Selecting trustees requires careful consideration. By following these tips, grantors can have confidence when deciding who to appoint as trustees.
