Trustees:  Consideration for selecting those who will make decisions for you.

A trust or power of attorneys or will are all documents that at their best do what you would do at a time when you’re not available.  The situations can be death or injury or disease.  We can plan for potential contingencies but what we can do best is to choose the right person for those unexpected, undocumented life events.  The trustee or agent is themselves subject to life so how will your choice make your decisions in the midst of their lives.

1. The ultimate success of your trust’s mission will depend in large part on how your trustee carries out your intentions, making the selection of a trustee one of the most important elements of trust design.
2. The ideal trustee should possess or have ready access to legal, tax, investment, and administrative expertise, as well as the wisdom to invoke that expertise when needed. The ideal trustee should also be able to deliver that expertise loyally, decisively, and impartially.
3. Personal confidants, relatives, lawyers, accountants, and banks are all commonly used as trustees. Family members, friends, and business associates are often the most knowledgeable about your intentions and your beneficiaries’ needs, but may have less than optimal skills or temperament for the job. Professionals may offer a stronger skill set but can lack important personal connections to your family. Professionals may also be held to a higher standard of performance than lay trustees by probate judges and executors.

The considerations are many but zero in on a personal contact or a professional representative.  You can opt for a personal confidant or relative in whom you have strong faith, such as a business associate, sibling, or spouse. You can select a professional practitioner whose skills might be especially useful to your purposes, such as a lawyer, planner, or accountant. Or you can designate a bank or trust company to act as a corporate trustee. Each option presents a unique balance of benefits and concerns.The choices in each group are many and only you can make this final critical decision.  Think through scenarios of how your potential representative will handle decisions.

Ideally they will have a well-established relationship with your intended beneficiaries and a detailed knowledge of the unique circumstances in your bequest or life principles. That familiarity can provide the context needed to interpret your wishes in your absence most effectively. It can also lay the groundwork for a strong long-term relationship between the trustee and the beneficiaries. However, someone chosen solely on the strength of personal relationships and intimate knowledge may lack the training or skills needed to act impartially in the face of duress or emotional entanglement. What’s more, a friend or relative acting as a trustee might have a conflict of interest or be unable to devote sufficient time to the duties of trusteeship, and these potential deficiencies may not become readily apparent for some time.  The biggest obstacles is lack of organization and ability to delegate to a professional when needed.

A professional practitioner who has had significant involvement in your family’s affairs may offer many of the same advantages as a personal associate, such as personal relationships with beneficiaries and historical knowledge of unusual situations and special needs. They may also have the professional distance needed to remain dispassionate under difficult circumstances. However, like a lay trustee, an individual professional’s tenure may be subject to their own life and may ultimately be unavailable at some critical future juncture.

Edi Alvarez, CFP^®
BS, BEd, MS

www.aikapa.com