Legal Blog

The Weekly Scenario from Steve Shane – 7.8.13

Question:  Who should I select as Trustee of my trust? Answer:  In selecting a Trustee, you have a number of options. Of course it goes without saying that the first question to ask is always what is the objective of the trust as this will determine the direction that is taken, Trustee or otherwise. A Trustee can be a close friend, family member, professional (e.g., attorney or accountant) or a financial institution (e.g., a bank or trust company). A good Trustee is someone who is honest, financially responsible and trustworthy.  This person will wield a great deal of authority over the trust so it is very important that he or she be trustworthy.  The Trustee should have some working knowledge of investments, but does not necessarily need to be an expert as the trust assets can be given to an outside investment firm to manage. The Trustee is tasked with distributing assets in accordance with the terms of the trust, investing the money in the trust for the benefit of the beneficiaries and at times, preparing accountings and tax returns for the trust.  But depending on what assets the trust owns, the Trustee duties can be complicated.  For example, if the trust owns interests in an operating business, or owns other complex assets, it may be appropriate to name an institutional Trustee either as a co-Trustee with a trusted family member or to serve as the sole Trustee.  Corporate fiduciaries professionally manage trusts on a daily basis and typically have much more experience in this area than a family member.  Moreover corporate Trustees can act objectively in terms of the trust document itself and knows the law.   But having a corporate Trustee comes with a cost as they will need to be compensated (as opposed to a family member who may serve for little or no compensation). Comment:  The big difference that I see between a corporate fiduciary and an individual family member is that some family members are prone to making decisions on an emotional basis.  Since family members are not used to acting as Trustees that may not always know what is required or expected of them under the law.  One of the things I do as an advisor to the trust is to educate these individual Trustees before or during such time as they are called upon to serve in the role of Trustee. Steven E. Shane Principal Offit│Kurman Attorneys At Law 301.575.0313 Washington 443.738.1513 Baltimore 410.218.9339 Mobile 301.575.0335 Facsimile Please note the above material discussed is intended to provide only general information. Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated. For assistance with your specific legal problem or inquiry please contact me directly.