A trust agreement is a common addition to the average estate plan. There are numerous different types of trusts that help achieve a wide variety of estate planning goals. One thing that all trusts have in common, however, is the need to appoint a Trustee to administer the trust. To help ensure that you appoint the right person as your Trustee, the Los Angeles trust attorneys at Schomer Law Group, APC suggest some questions to consider when deciding on a Trustee for your trust.
Understanding What a Trustee’s Role Is during Trust Administration
A trust is a legal relationship where property is held by one party for the benefit of another party. The trust creator, referred to as the “Settlor,” transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries. The Trustee’s role during the administration of the trust includes responsibilities such as:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the “Prudent Investor Standard”
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Keeping detailed trust records
- Preparing and paying trust taxes
Questions to Consider When Deciding Who to Appoint as Your Trustee
You may have additional questions that cover unique concerns you may have, but the following general questions should be considered when deciding who is best suited for the role of Trustee:
- Does the person have legal experience or knowledge? Many of the tasks of a Trustee involve understanding complex state and federal laws that apply to trusts. Ideally, your Trustee should have prior experience in the legal field and/or a working knowledge of the laws involved.
- Does the person have financial experience or knowledge? As the Trustee, he/she will be responsible for investing and growing the trust assets. Make sure a candidate has the experience and/or education to be able to take on this responsibility successfully.
- Will appointing the person creates conflicts? Appointing a family member can create conflicts if the beneficiaries of the trust are also family members, particularly if the Trustee has discretionary powers under the terms of the trust.
- Does the person live close to major trust assets? If you include real property among the trust assets, it is best to appoint a Trustee who lives close enough to keep an eye on the property instead of relying on someone else to do so.
- Is the person skilled at conflict resolution? Conflict among the beneficiaries of a trust is common. Appointing a Trustee who is skilled at conflict resolution will often result in avoiding costly litigation which can drain the trust of assets.
- Does the person have the time to serve as your Trustee? Never assume that someone is available to serve as your Trustee. When it comes time to administer the trust, the individual does not have the time, has moved away, or has personal/medical issues that prevent him/her from fulfilling the duties of a Trustee.
- Is the person willing to serve as your Trustee? By the same token, don’t assume that someone is willing to take on the job of Trustee just because they are a family member or close friend. It is a big job and may be too much for some people. Always sit down and discuss the position with a prospective Trustee before appointing someone as your Trustee.
Contact Los Angeles Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about who to appoint as the Trustee of your trust, contact the experienced Los Angeles trust attorneys at Schomer Law Group APC by calling (310) 337-7696.