Trusts are designed to protect your legacy and support your loved ones for years to come. When creating a trust, choosing the right trustee is just as important as selecting the right type of trust. It’s a big decision that requires careful thought. You might consider a trusted family member for the role, but that’s not always the best option.
Serving as a trustee comes with legal, financial, and administrative responsibilities. Even if you fully trust a family member, they may not have the time, expertise, or resources to manage a trust effectively over the long term.
In many cases, a professional or corporate trustee may be a better fit. According to Trust & Will, a professional trustee is “not the Beneficiary of a Trust, and oversees management of that Trust in a professional capacity.” At first glance, choosing a family member as a trustee may seem like the best choice, but it’s important to weigh the benefits of having a professional trustees overall.
So why choose a professional trustee?
- Life Changes Could Bring Instability
- No matter how reliable or trusting a family member may be, life can bring unexpected changes—health issues, family obligations, moves, or other personal challenges. These situations can affect their ability to carry out trustee duties consistently and without interruption.
- A professional or corporate trustee, such as a trust company or bank, offers continuity, stability, and peace of mind. If one representative is unavailable, another can step in without disruption to the administration and important aspects of the trust.
- Family Members May Become Biased in Decision-Making
- Family relationships are not always straightforward. A family member might unintentionally favor one beneficiary over another or be influenced by family dynamics when serving as trustee. This can lead to complications, and more importantly, may result in decisions that stray from your original plan.
- In contrast, a professional or corporate trustee is an unbiased third party. Their sole responsibility is to follow the instructions in your trust and act in the best interest of all beneficiaries.
- Conflicts of Interests May Arise
- Even the most trustworthy family member may face difficult choices or potential conflicts, like managing or selling family-owned property, making loans to other relatives, or handling sensitive financial matters.
- A professional trustee is legally bound to avoid personal gain and must follow your trust instructions exactly as written. Their decisions are based on legal and fiduciary responsibilities, not personal preference, adding another layer of security to your estate plan.
- Family Members May Lack Financial Expertise
- Managing and growing trust assets requires specialized knowledge like understanding risk, diversification, and long-term financial planning. While a family member may have some experience in these areas, a professional trustee brings a deeper level of expertise.
- Most professional trustees have access to in-house investment teams and trusted advisors. They also stay current with tax laws and trust regulations to ensure accurate and efficient administration. This level of support helps protect the trust and serve both current and future beneficiaries.
Family is Forever. Make Sure Your Wishes Are Too.
It’s natural to think of a family member when choosing a trustee. But this decision is about more than trust. It’s about selecting someone with the time, objectivity, and experience to carry out your wishes faithfully.
By choosing a professional or corporate trustee, you can move forward with confidence knowing your estate will be managed according to your plan. If you’re unsure which option is right for you, contact our team to find the best path forward.
