If your estate plan includes one or more trusts, you will need to decide who should be named as trustee(s). Trusts are legally binding contracts, so the individual(s) or company named is legally obligated to carry out your wishes as specified in the trust agreement.
The biggest decision is often whether to name individuals (family members or close friends, typically) or to name a professional fiduciary, such as a trust company or trust department of a bank.
There are pros and cons to each approach, however more often than not, individual people are named as trustees rather than corporate entities.
One reason trust settlors (people creating trusts) name individuals instead of professionals has to do with perceived expense of administering the trust(s). Where corporate trustees are compensated for their services, that is often not the case for individual trustees. Individual trustees will very often have a stake in the success of the trust instead.
Another factor to consider is the experience level of your trustee(s). Most individuals serving as trustee don’t have experience serving in that type of role and often may need to hire professional help at some point during the trust administration.
Another potential downside to naming individuals as trustee is that putting one family member in the role of trustee could unintentionally put them in conflict with the beneficiaries; if one child is named as trustee to manage funds left in trust for her siblings, this can put her in an awkward situation of having to determine what is best for the beneficiary.
There are downsides to naming corporate trustees, too. In addition to the cost, corporations may act more conservatively than you would prefer. By their nature, they are also impersonal and the beneficiaries will likely not be dealing with the same person for the life of the trust.
Whatever you choose, it is important to name at least one successor/alternate trustee, in case the first named person or company is unable or unwilling to serve as your trustee. You also have the option of naming co-trustees; two or more trustees empowered to act on your behalf.
The trustee will serve an important fiduciary role for you, so it is important that you approach the decision thoughtfully. Contact us for more information, and to find out how we can help you with your estate planning.