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How to choose a trustee

On Behalf of | Sep 23, 2022 | Estate Planning

You started working on your estate plan, and decided upon the appropriate trust instrument for your needs. Now you have a new problem: Who should be your trustee?

I have an attorney buddy, so they can do it, right?

Unless they have actual trust experience, your buddy may not be the best choice. But, they may be able to help you make a decision. Remember, selecting a trustee is like hiring an employee. This is your fiduciary who will ensure your wishes are followed, but this is also a job that requires a particular set of skills and knowledge.

How much?

Cost is a huge consideration, regardless of the trust’s size. A small trust can be drained with excessive fees just as easily as a large trust. But, the key to making the financial decision is to know what the actual fee for services will be, the comprehensive fee. You may get a trustee fee quote, and if so, ask follow-up questions to make sure that the fee is all inclusive. Sometimes, you will get a very small rate from a single person, but if they have to contract out for services, the actual fee you end up paying may be much higher.

Legal requirements

To keep your trust free from lawsuits and in line with the law, there are requirements at the state and federal level, including IRS reporting requirements. This is in addition to needing the experience required to follow the trust documents, including investments, real estate, bonds, etc.

Act in the best interests of the beneficiaries and trust

Being a trustee also means having the ability to balance the best interests of the beneficiaries and trust. This may mean saying no to a beneficiary with a drug or alcohol problem, and then, helping them find a suitable rehabilitation program. It is a difficult position, and it is important that whoever you choose can make these impartial choices.

The takeaway

Who you choose as your fiduciary trustee can be just as important as the trust documents themselves. After all, if your designated Brooklyn, New York, trustee fails in their duties, your trust could be dissolved, sued or misappropriated, to the detriment of your beneficiaries.