Jan 31

One of the most important decisions in establishing a trust is selecting the trustee, and determining the terms and method of trustee succession.  The role of the trustee can vary greatly depending upon the terms of the trust. In some instances, the trustee will have significant discretion in making distributions to beneficiaries. In other cases, the trustee’s role will be primarily financial and ministerial. Some of the questions that you should consider in selecting a trustee include:

  • Should the trustee be an individual or corporation (such as a bank or trust company)?
  • What are the pros and cons of a family member trustee?
  • What are the pros and cons of a corporate trustee?
  • Should the primary beneficiary be the trustee?
  • How many trustees are required/permitted?
  • Should multiple trustees be required?
  • Can the current trustee add a co-trustee?
  • Should an independent trustee be required?
  • Who qualifies as an “independent” trustee?
  • Who can remove the trustee?
  • Should removal “for cause” be required?
  • What happens if a trustee is unable or unwilling to serve as trustee because of death or incapacity?
  • How is trustee capacity determined?
  • What are the trustee’s required duties?
  • Should there be a trust protector?
  • Should a designated representative be appointed to act for and bind the beneficiaries?
  • How will the trustee’s compensation be determined?

In addition, the trusteeship provisions of your trust can have important tax consequences that should be discussed with your attorney.