How to Choose a Trustee?
Provided by Colleen M. Henes, CFP®, JD
Financial Advisor, Advanced Planning
August 8, 2019
As you plan for your own and your family’s financial future, you may be considering the creation of a trust. If you decide a trust is needed, either during your lifetime or in your will, you will have to choose a trustee to administer it. A trust is a legal arrangement that transfers property to a trustee, who manages it for the benefit of the individuals you name. The law sets high standards that every trustee must meet. You can choose almost anyone to serve as your trustee—a family member, a friend, an accountant or attorney—but the best option is often a corporate fiduciary, such as Strategic Financial Group Private Trust Services, a Trust Representative Office of National Advisors Trust Company (“SFG Private Trust”). Naming a corporate fiduciary—alone or jointly with a family member—has several advantages for your beneficiaries, namely continuity and stability. Stability is important because a trust may extend over many years and into a second generation of beneficiaries. You can expect a corporate fiduciary to continue to serve your family during the trust’s entire term. But the lifespan and health of an individual trustee are always uncertain and this should be a factor you take into consideration when you select a trustee and a successor trustee to take over if, for some reason, your original trustee cannot continue to serve.
More Advantages of a Corporate Trustee
Unfortunately, family members may not be able to devote the necessary attention or time to handling what is a fairly complex undertaking. Even smart friends or business associates are unlikely to have the expertise required to serve as a capable trustee. Mistakes made in the administration of the trust may result in needless expense and cost you, your estate, and/or your beneficiaries’ valuable assets. And unlike friends and family members, SFG Private Trust won’t move away, fall ill, or lose interest in overseeing your trust. We also have the experienced investment professionals and resources that are essential to effectively manage your trust assets and address the needs of beneficiaries over the trust’s term. If you feel more comfortable having someone close to you involved in managing your trust’s assets, consider naming a friend or family member as co-trustee of your trust. With this approach, you will have the perspective and family connection of an individual trustee as well as our professional experience and skills. Take your time before naming a trustee of your trust. Your advisor would be happy to provide more details about SFG Private Trust and our services and the benefits of choosing an institutional trustee.
Choosing a trustee is an important step in setting up your trust. Before you decide, you must first understand the trustee’s role and evaluate the history of the trustee’s performance and its objectivity.
A Trustee’s Role
It sounds simple enough - you create a trust and choose a trustee. But keep in mind the institution you name as trustee will be legally responsible for the proper distribution of trust assets to trust beneficiaries. It is important to choose a company with the appropriate skills and commitment. Tasks a trustee might perform include:
• Accounting and administrative duties, such as paying bills, retitling assets, and bookkeeping
• Asset management, including reviewing investment performance, maintaining records, tracking investments, and collecting dividends and other income
• Maintenance and transfer of real estate, including obtaining titles, deeds, and appraisals
• Management, valuation, and disposal of business interests held in the trust
• Valuation and distribution of personal property
• Management of unique assets, such as farm or ranch holdings, copyrights, patent rights, and oil and gas interests
• Estate settlement, including preparing tax returns and paying creditors
• Distribution of assets according to the trust terms
History of Performance
The performance history of a trustee is important. To assess a trustee’s potential for future results, you need to examine past achievements. You will want a trustee with a solid reputation in the community and a proven track record in administering trusts and especially in managing investments.
No trust document can foresee every eventuality that may occur. During the term of the trust, your trustee will be called upon to make careful decisions that are in the best interests of your beneficiaries. You can expect a corporate fiduciary to make such decisions objectively.
Contact your financial advisor today to learn more about how SFG Private Trust can be the reliable solution for your trustee needs.
Unless otherwise expressly indicated, the opinions or views expressed in this article are the author's own and do not reflect, and may differ from, the opinions or views of StrategIQ Financial Group, LLC or others within StrategIQ Financial Group, LLC, including its officers, managers, owners, employees or other service providers.