For many clients, selecting a trustee is just as difficult a task as talking with me about their own demise. To make matters more difficult is the fact that every client, depending on life stage and estate complexity may be required to consider a different set of potential candidates. Let’s look at it on a timeline.
For clients that are new parents, selecting a trustee may be as simple as deciding which sibling of theirs would be the most financially responsible. Secondly you have to decide whether you want the trustee and the child’s legal guardian to be the same person. Alternatively, you have to consider if a separate trustee has a good personal relationship with the Legal Guardian of your minor child. Do they get along? Would they be able to coordinate for the best interest of the child?
I am frequently asked, “Should I select a successor trustee that is the same as my child’s legal guardian?” The answer is that for maximum protection of your assets, or more fairly put, for protection of the child’s assets, having a separate trustee from the legal guardian is the safest route to go. As a trust and probate attorney I have seen far too many estates abused by individuals who are not the intended beneficiary.
For clients that have grown adult children, a lot of the above concerns are gone. However, a new set of concerns arise. Do I select just one of my children to be successor trustee? How will the others feel about this; will they get along enough to administer the estate? Frequently I find my clients selecting one child or two of several children to act as co-trustees. While this does keep the administration private, it is very important to consider the children’s relationships with each other.
Finally, the clients that do not wish to put any of their relatives or children in this hot seat look to independent trustee companies. These range from national banks, to local private companies. They typically come in two formats, administrative or assets under management. The administrative companies solely handle the piece of the transaction that requires the trustee to act. They get paid, not off the assets but off of time worked. Whereas the other side collects a flat fee, typically 2% or so, to manage the financial assets as well as administer the trust estate.