Who should you choose to be the trustee of your estate plan?
The trustee should be aware of his or her duties and responsibilities as the trustee of your plan and understand how to implement the instructions outlined in your plan regarding how the trust assets are to be distributed to the beneficiaries or otherwise used for their benefit. The trustee must protect the trust assets and make sure they are properly invested, prepare annual accountings, and file tax returns for the trust.
You should give careful thought to choosing your trustee.
FAMILY MEMBER OR CLOSE FRIEND
They will have personal knowledge of the family and an understanding of the true needs of the beneficiaries. They can also generally be trusted to act in the beneficiaries’ best interests and usually will serve for little or no fee.
Downside: They make decisions on an emotional rather than objective basis and they often lack the financial skills necessary to invest and manage large sums of money. They also have a personal agenda that conflicts with their fiduciary duties
Attorneys, CPAs, or financial advisors generally have expertise in finances and knowledge of the legal requirements of trust management. Depending on your relationship with these professional advisors, they may or may not have a fully understanding of your family and your goals and desires. However, they can provide an objective viewpoint in carrying out your wishes.
Their fees are commensurate with their professional skills and expertise, and are often well worth the fees. These advisors also carry professional liability insurance that financially protects your beneficiaries if mismanagement of trust assets occurs.
TRUST COMPANIES OR BANK TRUST DEPARTMENTS (corporate trustees)
They have substantial expertise in serving as trustees, are highly regulated by state and federal agencies, and have the resources to pay for mistakes or mismanagement.
Disadvantages: Higher fees and a perceived inherent conflict of interest if they charge fees based upon assets under management, their lack of personal knowledge of your family and other beneficiaries; and the fact that they are often seen as regimented and dispassionate.