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Choosing a trustee

On Behalf of | Dec 2, 2021 | Estate Planning |

Many estate plans for residents of Nevada involve choosing a trustee to manage one of the many kinds of trusts that are used in estate plans. Therefore, choosing a proper trustee is one of the weightiest tasks faced by the maker of the trust (the “settlor”). Very few people have faced this task, and they have little idea of what makes a good trustee. Before turning to the actual task of choosing a trustee, a person should understand a bit about the trustee’s function.

What is a trustee?

A trustee is a person chosen by the settlor to manage the assets in the trust. Thus, the trustee will be authorized to invest and spend trust assets. Most importantly, the trustee will be responsible for distributing the trust assets in the manner and to the persons specified in the trust document. A trustee must therefore possess a reasonable amount of intelligence. The trustee must also possess an understanding of the types of assets that are given to the trust and the laws that apply to the transfer of such assets. The trustee must manage the assets to ensure that their value is not inadvertently reduced or that assets are lost to the trust. All these duties require an understanding of financial matters and, if possible, the law of decedent’s estates.

The trustee’s tasks

Depending upon the type of trust involved, the trustee may be responsible for a variety of tasks that may include gathering and taking possession of assets given to the trust, valuing assets, inventorying assets, investing assets, managing assets, liquidating assets, communicating with the beneficiaries, providing regular accounting to the beneficiaries, making the distributions required by the trust document, and complying with all other terms contained in the trust document, while at the same time balancing all these tasks within the confines of the rules contained in state law.

Qualities of a good trustee

As the job title suggests, a trustee must first of all be trustworthy. This criteria should eliminate all family members as trustees, not because they are inherently dishonest but because they should not be placed in a position that involves a plain conflict of interest. Similarly, anyone who is a beneficiary of the trust cannot serve as a trustee. A trustee should be able to communicate effectively with the beneficiaries of the trust to keep them abreast of the condition of trust assets. If the trust assets consist primarily of publicly held securities such as stocks and bonds, the trustee should have an ability to effectively invest such assets and to sell them under favorable market conditions.

Professional trustees

For large estates, the settlor may wish to choose a professional trustee. A professional trustee is a person or institution that is especially knowledgeable in the handling and management of trust assets. Banks and lawyers also offer such services. All trustees will receive a fee, and this should not be an issue in naming the trustee.

In choosing a trustee, the settlor may wish to rely on the advice of an experienced estate planning attorney or the attorney who prepared the estate plan or drafted the trust instrument.