Key Considerations When Selecting a Trustee
Choosing the right trustee requires assessing who is best equipped to honor your intentions and support your beneficiaries.
One of the most important decisions the creator of a trust – or the grantor – must make when executing a trust is selecting a trustee. Recall that a trust is a fiduciary agreement to hold assets like real estate or investments for beneficiaries. The trustee holds a fiduciary duty to uphold the goals established for the trust and to act in the best interests of the grantor and those who will benefit.
These goals may include managing and distributing assets in accordance with the grantor’s instructions. Certain trusts may also be structured to help minimize taxes or delays associated with – and public nature of – probate court proceedings. The formation of a trust strategy typically involves assistance from multiple professionals, including estate planning attorneys and your financial professionals. At the end of the day, appointing the right trustee(s) is essential to establishing a successful plan.
WHAT TO CONSIDER WHEN SELECTING A TRUSTEE
The trustee you choose will have the legal authority to manage the trust and its distributions. A trustee can be a friend, family member, or a professional trustee who may be an experienced individual or organization. You can appoint more than one trustee, such as a combination of a family member and a professional. When considering who to select, there are a variety of factors to weigh to help make your decision.
Trustworthy and Impartial
Your trustee should possess a strong sense of ethics and integrity. It’s their duty to treat beneficiaries fairly and follow the terms of the trust. They must remain unbiased toward any beneficiaries or outcomes outside the trust’s requirements.
Empathy
A trustee’s responsibilities may involve working through challenging or sensitive family dynamics, often requiring soft skills beyond technical expertise. Serving with empathy helps foster trust and can reduce conflict among the parties involved.
Financial Acumen
Ideally, a trustee will have the financial knowledge and skills to manage assets effectively and understand tax considerations. A trustee should also have the experience to promote asset growth and the judgment to support a trust’s sustainability over time.
Responsibility and Administrative Skills
Trust administration includes ongoing tasks, such as record-keeping, tax filings, distributions, and communication. Therefore, the trustee you select should be dependable and detail-oriented. Many people find it helpful to include at least one professional trustee with these skills.
Continuity
It’s important to consider the longevity and continuity a trustee can provide, as trusts are often designed to last over extended periods. Part of the creation of a trust includes a plan for trustee succession to facilitate orderly transitions over time.
TRUST & FIDUCIARY SERVICES AT WELCH & FORBES
Selecting a trustee is a vital decision, as you are empowering someone to carry out your intentions well into the future. At Welch & Forbes, we are experienced in serving as professional trustees for our clients, many of whom span multiple generations and value the continuity of the relationships at the firm. We can serve as a primary trustee, in combination with family/friends, or even assume responsibility from earlier corporate trustees.
A family’s desire to select a professional trustee often stems from concerns about what will happen if the family’s primary financial decision-maker passes away or becomes incapacitated. There may be uncertainty about who is best equipped to assume this role among the next generation. Through our ongoing relationships and deep understanding of clients and their families, our portfolio managers are often well-suited to step into the trustee role. Our thoughtful internal process for managing trustee transitions among our portfolio managers is designed to facilitate continuity and familiarity over time.
If you are interested in learning more about the Personal Trust and Fiduciary Services at Welch & Forbes, please contact us online or call our Client Development team at 617-557-9800.
Disclosure: This information is provided for educational purposes only and does not constitute investment, financial, tax, or legal advice. Consult your tax advisor or legal counsel for advice and information concerning your particular situation. Welch & Forbes, LLC is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.