Every
trust
needs a
trustee.
When selecting one, you should consider the potential trustee’s background, business acumen, and willingness to serve. Individual trustees may be friends, family members, business associates, and advisers such as lawyers or accountants. Corporate trustees are banks, trust companies and institutions with specific training in serving in that role.
Corporate trustees have significant professional expertise and offer continuity of management. Even if they merge or go out of business, another institution typically takes over. But corporate trustees charge a substantial fee for their services. Individual trustees, especially family members, may be willing to serve without a fee.
Individual trustees also may have a greater understanding of the needs of trust beneficiaries. When setting up a trust for your grandchildren, for example, you might postpone distribution of the trust principal until they reach age 30. But at the same time you might give the trustee the discretion to make advance distributions for purposes such as buying a home, starting a business, or attending graduate school.
Serving as a trustee
There may also come a time in your personal or professional life when someone asks you to serve as a trustee. Before accepting, it’s a good idea to consider the time commitment, as well as the obligations trustees have to:
Follow the exact terms of the trust.
Act as a fiduciary to manage trust assets for all beneficiaries.
Use reasonable care and skill to manage trust property.
Maintain complete books and records of all trust activities.
File all required tax returns and pay any taxes that might be due.
