Trustee Selection

It is a common practice and good idea to make a family member a trustee for a trust in which another family member is the beneficiary. However, there have been instances where family members have shown that they can be bad trustees. Here, the grandmother of the beneficiary of the trust literally gambled a good portion of the funds of the trust at an Indiana Casino. The grandmother’s actions were only discovered because she ignored attempts by the father of the beneficiary to reach her. So what does a settlor need to know when selecting a trustee?

There are several different things that a settlor might want to take into consideration when selecting a trustee. First, a settlor might want to consider nominating two co-trustees, however, this does not guarantee that the trust will be managed efficiently or effectively. The most reliable and efficient trustee is a professional corporation, such as a bank. Still, the costs of this type of trustee might be too high, and these trustees only manage trusts with a certain amount of assets in the trust. A settlor might also want to consider appointing a trust protector, whose sole duty is to ensure that the trust is being managed properly.

See Josh Crank, When You Can’t Trust Your Trustee, Lawyers.com, June 4, 2012.

Special thanks to Jim Hillhouse(Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.