If you utilize a trust-based estate plan, you will need a separate individual or institution to manage the trust either now or in the future, depending on how your trust is set up. Trustee’s serve a vital role to the operation of your trust. It can be a difficult job and it can last for quite a while, depending on how the trust property is to be distributed. The trustee will have to make investments, pay bills, keep accounts, and prepare tax returns.
The trustee has a fiduciary duty to both the settlor (the person creating the trust) and the beneficiary(ies). The trust will set out the powers and obligations of the trustee. The trustee will hold title to the trust property (in trust) for the benefit of the beneficiary(ies). The trustee can initially be the settlor but, eventually, depending on how the trust is set up, a successor trustee will need to step in.
The law isn’t very strict about who can legally be a trustee (a competent 18 year old who is capable of managing their own affairs), but you will ideally want someone who does more than meet the minimum legal requirements of a trustee. While the trustee does not have to have any financial or legal background, they need to be able to manage finances and make sound financial decisions that will be in the best interest of the beneficiary(ies). You’ll also need to be able to trust the trustee. That person will ultimately be tasked with managing your assets and if they’re not trustworthy, they may misappropriate trust assets.
You need to make sure that your chosen trustee is in it for the long haul. If you intend your trust to span more than one generation, you need to line up alternate/successor trustees who will be ready when the original trustee passes the torch. One option for longterm planning is to give the trustee the power to appoint a successor or to utilize an institutional trustee (like a bank) after they’re no longer willing or able to continue as trustee.
The decision to appoint a trustee is a significant one. Make sure you have a serious conversation with potential candidates before making any decisions.
Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.
Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.