August 2009

What Kind of Person Should Be Your Trustee?

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When you create a revocable living trust, you must choose someone to assume the role of trustee after you die or if you become incapacitated. Choosing that person can be challenging, and we hope this article proves helpful.

Roles and Responsibilities of a Trustee. In making decisions about how trust assets are to be invested or released, the trustee has a duty to act in a manner that serves the best interests of the beneficiaries. You should be assured that your chosen trustee is a responsible person who will carry out your wishes, make sound judgments and seek out professional advice when necessary.

Typically, this role is assigned to a spouse, relative, close friend, business associate, professional advisor or corporate fiduciary. Sometimes, co-trustees are chosen from a combination of these candidates.

You Can Keep It in the Family. A relative can be a good choice for trustee if he or she:

• is competent to handle the finances and will follow the trust's instructions;

• has adequate time and a genuine interest to take on the role; and

• will avoid family conflicts by being unbiased and unemotional in making decisions.

Corporate Fiduciaries as Trustee. Some trusts are complex or may be designed to benefit one or more heirs for many years to come. Banks and trust companies are regulated by the government and can manage trusts for decades. Their advantages include the following:

• they don't die or become incapacitated;

• they act objectively in following a trust's instructions; and

• they keep good records and have estate administration, tax and investment expertise.

Considering a Professional Advisor. Sometimes a family member, friend or a trust company will not be the right choice. They might be unavailable, unreliable or simply too expensive.

In such a case, a professional who is familiar with your plans may be a good choice, if there is no conflict of interest. The trustee could be a financial advisor, an estate planning attorney, a tax professional or a combination thereof.

Regardless of whom you choose, the basic qualities of a good trustee are the same: integrity, good judgment, and objectivity.

Adapted from the Daily Plan-It newsletter

Hoopes, Adams & Alexander, PLC, is a Chandler, Arizona, law firm offering services to Phoenix-area clients in the areas of estate planning, entity formation, commercial and real estate transactions, and civil litigation.