Hello, I’m Eric Ridley, an estate planning lawyer from The Law Office of Eric Ridley in California. Today, let’s talk about a crucial aspect of estate planning: choosing the right trustee. This decision can significantly impact how your trust operates, and it’s essential to understand your options.

Understanding the Role of a Trustee

A trustee plays a pivotal role in managing a trust. Their responsibilities include managing assets, handling financial transactions, and ensuring the trust’s terms are followed. So, who should you trust with this responsibility? It’s a question I often encounter in my practice. I will explain what a trustee does and discuss how to pick the right person for this super-important job.

Responsibilities of a Trustee

1. Asset Management: The trustee is responsible for identifying, securing, and managing all assets held in the trust. This might include real estate, investments, cash, and personal property. They must make prudent investment decisions, balancing growth with risk, to ensure the trust’s assets are preserved and, if applicable, grow over time.
2. Financial Transactions and Record-Keeping: The trustee manages all financial aspects of the trust, including paying bills, collecting income, and handling taxes related to the trust. Keeping detailed and accurate financial records is crucial. This includes tracking all income and expenditures and maintaining documentation for transparency and accountability.
3. Adherence to Trust Terms: A trustee must understand and strictly adhere to the terms in the trust document. This includes the distribution of assets, timing, and conditions set for beneficiaries.  They must also ensure the trust complies with all relevant laws and regulations.

Family Members as Trustees

Often, people consider appointing a family member as a trustee. This can be a comforting choice because family members know you and your beneficiaries well. However, it’s important to assess their financial acumen and impartiality. Can they manage complex financial matters? Will they be fair to all beneficiaries?

Professional Trustees 

Alternatively, you could opt for a professional trustee, such as a bank or a trust company. Their experience in managing trusts and neutrality can be advantageous. However, they come with a fee. Is this cost justified for your trust? It’s a factor worth considering.

Essential Qualities to Look for in a Trustee

1. Trustworthiness and Reliability: The most important trait in a trustee is trustworthiness. They should be reliable, honest, and acts with integrity. The ability to act impartially, especially if beneficiaries have conflicting interests, is essential.
2. Financial Acumen: A basic understanding of financial matters and investments is beneficial. A higher level of financial experience may be necessary for more complex trusts. The trustee should be capable of making informed decisions about asset management and distributions.
3. Organizational Skills: The role requires someone who is organized and attentive to details, as they will manage and record numerous transactions. They should be capable of meeting all deadlines, like tax filings and distribution schedules.
4. Communication Skills: Good communication skills are essential for informing beneficiaries and addressing concerns. The ability to overcome and resolve conflicts among beneficiaries is a valuable skill for a trustee.
5. Professional Assistance: Trustees can, and often should, seek professional advice from financial advisors, accountants, and attorneys, especially for complex matters.
6. Willingness to Serve: Ensure the person you are considering is willing and able to take on the trustee’s responsibilities.

Co-Trustees

Sometimes, appointing co-trustees – a family member and a professional – can be a wise move. This arrangement merges personal insight with professional experience. However, ensure that the co-trustees can work well together to avoid conflicts.

Reach Out for Personalized Advice

Choosing the right trustee is a decision that requires careful thought and, often, professional guidance. If you’re in California and need help deciding who should be your trustee, I’m here to assist. I promise a friendly, jargon-free conversation. Your initial consultation is free, so don’t hesitate to call me at (805) 307-7668 or contact me online. Let’s ensure your trust is in good hands.