Choosing a testamentary trustee can be a difficult task. Your trustee has the job of administering the assets of your trust for the benefit of loved ones long after you are gone. In effect, the trustee is the hand that reaches beyond the grave on your behalf. Your choice of trustee should merit your most serious consideration.
While many of us may think of a close relative or friend as our first choice, this may not always be the best idea. Your trustee must, of course, be an individual who is both scrupulously honest and also able to handle large sums of money conservatively and wisely. It is not enough to know that it is wrong to steal from or self-deal with the trust. Your trustee should know the difference between a sure thing investment in Egyptian chocolate-covered cotton futures and blue chip stocks and bonds.
Many attorneys slavishly copy language into their trusts permitting their trustees to serve without bond or undertaking (meaning that if your trustee acts dishonestly or imprudently the funds may be lost). It is not a big deal to provide that your trustee be bonded. This hedge against dishonesty and stupidity doesn’t cost all that much. All that is required is that the trustee purchase a surety bond to insure his or her faithful and proper performance (if your choice of trustee is not bondable, that is, in itself, a sign that maybe it’s not such a good choice!). Your trust will pay the expense which is a small price to insure that your assets will be protected and that the aim of your trust will be achieved.
Be very careful in considering your trustee’s age when you make your choice. Your favorite uncle, your father or even your sixty year old attorney or accountant may not be able to function competently on behalf of your two year old child and afterborn children who may not be entitled to their share of the trust assets until the trustee is somewhere one side or the other of ninety. It may be important to choose a younger person for the job.
Be sure that your choice of trustee undertands and accepts the obligations of the position. Handling all of your assets on behalf of orphanned children who will be upset, confused and not always friendly or easy to deal with is not the easiest responsibility to undertake. I generally advise my clients to ask that their choice of trustee "sleep on the idea" for a few days. In short , don’t take "yes" for an answer. At least not right away.
Some of my clients ask me about whether or not they should choose a bank as their trustee. First understand that most banks do not want their trust departments to be bothered with small trusts worth much less than one million dollars. Second , consider that unless your trust assets will amount to several million dollars, a bank may not be able to service the trust in the best possible way for your beneficiaries. Your trust will need to be large enough to receive the attention it will require and not all institutions will be able to react to the particular needs of your beneficiaries.
When you consider a financial institution for your trustee, keep in mind that trust departments all have some turnover amongst their personnel. When you choose a particluar bank because its trust department is the hottest in town, those "superstars" may be long gone by the time it is necessary for them to act. It may be a "lukewarm" or even a lackluster trust department that ultimately gets to invest and manage your assets.
Nobody ever said that choosing a trustee would be easy. Take advantage of the advice of your legal and financial advisors when your make this decision. Don’t be afraid to offend anybody. It’s your money and you worked hard for it. Consider a requirement that your trustee be bonded. Remember also that, as long as you are alive and competent, you can revise your will, your trust, and your choice of trustee.