When you create a trust as part of your estate plan, you are not just deciding how your assets will be distributed. You are also deciding who will be responsible for making that happen. The trustee you select will have significant power and responsibility over your financial affairs, potentially for years. Choosing the right person for this role, and planning for alternatives if that person cannot serve, are critical decisions that deserve careful thought.
Many people focus primarily on the terms of their trust, determining who gets what and when, without giving equal attention to who will actually carry out those instructions. Yet the choice of trustee can dramatically affect how smoothly your estate plan functions. A capable, trustworthy, and organized trustee can make the administration process straightforward for your beneficiaries. An unsuitable trustee, or a gap in your trustee succession plan, can create delays, expenses, and family conflict.
Understanding what trustees do, what qualities to look for, and why backup planning matters can help you make better decisions for your estate plan and your family’s future.
What Does a Trustee Actually Do
A trustee is the person or institution responsible for managing a trust according to its terms. During your lifetime, if you have a revocable living trust, you likely serve as your own trustee, managing your assets as you always have. The trustee role becomes most significant when you can no longer manage things yourself, either due to incapacity or death.
At that point, your successor trustee steps in. Their responsibilities typically include gathering and protecting trust assets, paying bills and debts, filing tax returns, keeping accurate records, communicating with beneficiaries, and eventually distributing assets according to the trust’s instructions. Depending on the complexity of your estate and the terms of your trust, this process can take months or even years.
The trustee occupies a fiduciary position. This means they have a legal duty to act in the best interests of the trust and its beneficiaries rather than in their own interest. They must manage assets prudently, avoid conflicts of interest, keep beneficiaries reasonably informed, and treat all beneficiaries fairly according to the trust’s terms. Breaching these duties can expose a trustee to personal liability.
Qualities to Look for in a Trustee
Given the scope of trustee responsibilities, not everyone is well suited for the role. When considering potential trustees, look for several key qualities.
First, consider organizational skills. A trustee needs to keep track of multiple tasks, deadlines, and details over an extended period. They will need to maintain records, respond to correspondence, coordinate with financial institutions and possibly attorneys or accountants, and ensure nothing falls through the cracks. Someone who struggles to stay organized in their own life may find trustee duties overwhelming.
Second, evaluate financial capability. Your trustee will be handling money, potentially significant amounts of it. They need to be comfortable reviewing account statements, understanding investment basics, and making sound financial decisions. This does not mean they need to be a financial professional, but they should be able to manage their own finances responsibly and understand the weight of being in charge of someone else’s assets.
Third, assess trustworthiness and integrity. This may seem obvious, but it deserves emphasis. Your trustee will have considerable control over your assets and will be making decisions that affect your beneficiaries’ financial wellbeing. They need to be someone who will honor your wishes and treat beneficiaries fairly, even when no one is looking over their shoulder.
Fourth, consider interpersonal skills. Depending on your family dynamics and the terms of your trust, your trustee may need to navigate sensitive conversations with beneficiaries. They may need to explain why distributions are being made in a certain way or handle disagreements about the trust’s administration. Someone who can communicate clearly and handle conflict appropriately will be more effective in this role.
Having the Conversation Before Naming Someone
Before naming someone as your trustee, talk to them about it. This conversation serves several important purposes.
First, you can explain what you are asking them to do. Many people who are named as trustees have only a vague understanding of what the role involves. By walking through the responsibilities, you help them understand the commitment they would be making.
Second, you can gauge their willingness to serve. Being asked to serve as trustee can feel like an honor, and many people will say yes without fully considering what they are agreeing to. Give them permission to think it over and to decline if they are not comfortable with the responsibility. A reluctant trustee who accepts out of obligation may not serve your beneficiaries well.
Third, you can share your intentions for the trust. While your trust document will contain specific instructions, a conversation gives you the opportunity to explain your thinking. Why did you structure distributions a certain way? What values do you hope your trustee will keep in mind? This context can help your trustee make decisions that align with your wishes in situations the trust document may not specifically address.
Why Multiple Backup Trustees Are Essential
Life is unpredictable. The person you name as your successor trustee today may not be available when the time comes for them to serve. They may have passed away, become incapacitated themselves, moved to another country, or simply be unable or unwilling to take on the responsibility at that moment in their life.
Not having sufficient backup trustees named in your trust can create serious complications. If your named trustee cannot serve and no adequate backup is designated, someone may need to petition the court to appoint a trustee. This process takes time and costs money. Worse, the court may appoint someone you would not have chosen, or family members may disagree about who should serve, leading to conflict and litigation.
Naming multiple backup trustees provides a safety net. Think through several levels of succession. If your spouse is your first successor trustee, who would take over if your spouse cannot serve? If that person is unavailable, who is next? Having three or four people identified in your trust documents gives your estate plan resilience against unexpected circumstances.
When selecting backups, consider the same qualities you looked for in your primary trustee. Also think about age and life stage. A backup trustee who is significantly older than you may not be available decades from now. Including at least one backup who is younger can provide additional security for a trust that may need to operate far into the future.
When Trusts Are Not Properly Maintained
Even with the right trustee and adequate backups, problems can arise if your trust is not properly maintained over time. Trust documents should be reviewed periodically to ensure they still reflect your wishes and circumstances. Trustees named years ago may no longer be appropriate choices. Relationships change. People move, develop health problems, or pass away.
When a trust is not properly updated, it creates extra work for your trustee on the back end. They may need to track down people who are no longer appropriate to serve, work around outdated provisions, or seek guidance on how to handle situations your trust does not address.
In Washington State, the Trust and Estate Dispute Resolution Act provides a framework for resolving disputes and addressing problems with estate documents. While this is a valuable tool, using it means additional time, expense, and potential uncertainty for your family. Keeping your trust current, including your trustee designations, helps avoid these complications.
Professional Trustees as an Alternative
For some families, naming a professional trustee makes sense. Banks, trust companies, and other institutions offer trustee services. Professional trustees bring knowledge in trust administration, investment management, and legal compliance. They do not have the personal relationships that can sometimes complicate family trustee arrangements, and they do not face the same availability concerns as individual trustees.
Professional trustees charge fees for their services, which come out of the trust assets. For larger estates or trusts with complex terms, these fees may be worthwhile for the professional management they provide. For smaller or simpler estates, the cost may not be justified.
Some families choose a hybrid approach, naming a family member as trustee but designating a professional trustee as a backup. Others name co-trustees, pairing a family member who knows the beneficiaries with a professional who handles the administrative work. These arrangements can combine the benefits of both approaches.
Taking the Next Step
Your choice of trustee shapes how your estate plan will function when your family needs it most. Taking time to select the right person, have meaningful conversations about the role, and plan for multiple levels of succession protects your beneficiaries and honors the work you put into creating your trust.
If you have questions about trustee selection, want to review your current estate plan, or need to update your trustee designations, the team at View Ridge Law can help. Schedule a consultation today by calling 206-210-2047 or visiting www.viewridgelaw.com.
