How Does A Grantor Choose A Trustee?
The choice of a trustee is extremely important. The trustee owes beneficiaries a fiduciary duty to act in their best interests and usually receives compensation for trust management activities, so the grantor usually wants to make this decision personally. Many grantors choose family members or close friends due to personal confidence in those individuals, but others prefer professional trustee institutions because of staff expertise. A grantor should consider the burden posed by the trust’s administration, the compensation required by a trustee and the particular needs of the trust. If a trustee is not specified in the trust document, then a court will appoint one, possibly choosing a trustee whom the grantor would not have chosen freely.
Qualities And Qualifications
A trustee can be any person or institution capable of taking legal title to property. In order to make the trustee fully effective, however, the trustee also should be able to convey property. For example, minors and certain corporate entities can receive ownership but may not pass it on. Conveying ownership is necessary when distributing the trust property.
Legally, it is not necessary to notify the trustee prior to creating a trust, but a trustee may decline his or her appointment. Therefore, the grantor should choose someone who is willing to take on the required responsibilities. It is advisable to choose an alternate trustee in the event that the original choice is unable or unwilling to accept the trust obligations when the trust commences. Successor trustees are also a good idea in case a trustee resigns or is removed by court action.
Choosing Multiple Trustees
Grantors may choose multiple trustees to act together in managing trusts. Co-trustees must act unanimously unless the trust expressly allows division of responsibilities. Even when responsibilities are divided, each trustee retains complete individual legal liability for the entire trust.
A grantor should avoid possible conflicts of interest when choosing a trustee. The trustee’s fiduciary responsibilities prohibit actions not in the beneficiary’s best interests under the terms of the trust. A conflict of interest may raise a concern over whether the trustee can perform up to this standard or will instead breach his or her fiduciary duties.
A grantor may name himself or herself as trustee during his or her life. Additionally, a grantor may name one of the trust’s beneficiaries as a trustee. The only impermissible combination is naming the same person as sole trustee and sole beneficiary, because this arrangement merges the legal ownership with the property benefits as in regular property ownership.
Speak To An Experienced Attorney About Your Estate Planning Needs
Based in Atlanta, my firm, Charles M. Hall, P.C., serves clients throughout the surrounding areas of Georgia. To discuss your estate planning needs with a skilled attorney, contact me, Charles M. Hall, online or call 404-865-1966.