Trusts can serve as the primary testamentary instrument of an estate. They can also help people protect their assets or provide for a loved one with special needs. There are several important considerations when creating a trust.
Those considerations include choosing the right type of trust and funding it with appropriate resources. People also need to include the right language in trust documents to limit the use of trust assets to prevent abuses. One of the most important considerations when establishing a trust is who the trustor or person creating the trust names as the trustee.
A trustee has the obligation to administer the trust by following the instructions provided by the trustor. They may need to manage physical assets or financial investments. The role of trustee is a complex one that gives an individual control over valuable property. What are the characteristics of an ideal trustee?
Trustees should be organized
Trust administration can require many years of effort. Trustees need to manage and account for all trust resources. They may need to cover financial obligations in some cases, such as when a trust holds real estate that requires annual tax payments. Proper trust administration therefore requires diligent organization and careful record-keeping.
Trustees should be ethical
It is very easy for someone with access to and control over trust resources to abuse their position of authority. They could embezzle from the trust. They could hire their company or a business run by their children to provide services to the trust at an inappropriately high cost.
They might even let their personal relationships interfere and how they handle trust assets and when they distribute them to beneficiaries. A trustee has a fiduciary duty to the trust, and therefore they need to be capable of putting their own wishes aside to focus on what the trust and its beneficiaries need.
Trustees should be healthy
Unless a trust exists primarily to own and then liquidate assets, a trustee may have to serve in their role for many years. This is particularly true in cases where older adults create trusts to hold their assets during retirement or when people establish special needs trusts for vulnerable family members. Choosing a trustee who is physically healthy now and young enough to remain healthy for the duration of the trust’s administration is of major importance.
People who understand the role of a trustee may find it easier to evaluate their friends and family members for the right candidate. Choosing the best trustee possible can help an individual maximize the positive impact the trust has on beneficiaries.