The Wilmington Business Journal’s recent article, “Duties of A Trustee: Choose Wisely,” explains that there are several qualifications to consider when choosing a trustee. Here are some of the more important ones:
- Administrative skill and knowledge. The trustee must perform many tasks, like collecting assets, collection, reinvestment and distribution of income, document interpretation and bill paying, to name a few.
- Investment expertise. A trustee is required to develop an investment program that meets the requirements of all the trust beneficiaries. At the same time, she must comply with the instructions in the trust document.
- Tax and accounting capabilities. A trustee has to keep detailed, accurate records, to be able to submit timely reports to the trust beneficiaries, the probate court and the IRS.
- Relationship skills. The trustee should be able to develop an honest relationship with both the creator of the trust and the beneficiaries.
- Probably the most important qualification for a trustee is to uphold her fiduciary duty. She must be loyal and treat each trust beneficiary fairly and impartially.
People generally assume that a friend or relative is the best choice to designate as trustee. However, the question to be asked is, “Will an individual meet all the qualifications I require my trustee to perform?”
In many instances, a friend or relative isn’t in a position to carry out the duties necessary to be an effective trustee. A trust company is another option.
Choosing the right trustee is a critical decision. Assuming the role of trustee is a big responsibility. Take the time to think about this, before making that commitment.
Getting help from an experienced estate planning attorney can assist you in the estate planning process.
Reference: Wilmington Business Journal (September 13, 2019) “Duties of A Trustee: Choose Wisely”