Parents: Should you name your child as Trustee?
Children: Should you really serve as the Trustee if you are named?

If you have a son or daughter with good business sense, you may have concluded that he or she would make a good executor and trustee. This assumption will be tested in the heat of settling the estate, to be sure. 

If you have been appointed, should you attempt to carry out these duties?

A Trustee (or an Executor) must be prepared to: 

• Have proper custody of assets. As a fiduciary, the trustee must provide for safe keeping and proper management or investing of all assets. They must work with a financial fiduciary such as a Registered Investment Advisor, and be mindful of caring for real estate and business assets, often requiring hiring property managers and real estate salespeople.
• Care for the beneficiaries. This requires knowing the trust document and the circumstances of the devisees. You can have liability for failing to make a distribution or making an improper distribution.
• Collaborate with beneficiaries and professional advisors. The beneficiaries need to be able to state their needs and wants and cooperate with the trustee, and the trustee must listen. Other advisors are needed to assist the trustee to competently carry out their duties.
• Comply with laws – for tax filings, probate filings, trust laws for transfers of property and other assets, provide accounting to beneficiaries, and hire lawyers and tax professionals. 

You could select your child as your trustee…

if you have: 

• Simple finances, like a bank account that will split into equal shares
• A home that will be easy to sell
• Reason to believe that the child will have a good relationship with the others

 and if you do not have: 

• Houses to clean out
• A business to be disposed of
• Other assets or liabilities that may consume considerable time and effort, require organized family meetings and continual communication
• Conflicting personalities to manage
• Complexity from multiple trusts and tax filings

Pay attention to red flags

Time and time again, parents feel pressured by their take-charge children to put them into positions of authority. This child can alienate their siblings despite their talents in other areas. They can have tunnel vision on the tasks at hand and be out of touch with their family. 

They can also be mis-judged – parents think the take-charge child will be a good administrator because they have their own house in order, but they don’t have the whole package of skills to deal with all the issues, often all at the same time. 

These situations create problems in relationships after your passing. They can be averted by asking the other children if they would rather have an independent trustee instead of their bossy sister or brother. Will the others feel listened to, understood, and welcome to be involved? Do they have confidence that the child-trustee will seek out competent advice and follow through on all of their jobs?

Savvy children may be successful but their siblings see the other side to them. Siblings will identify key features such as willingness to listen, having the time to pay sufficient attention to duties, or the patience and kindness that a good fiduciary should possess. They may even have the propensity to be dishonest – never good.

In this case, the family has 3 options:

1. Outsource the role

If an independent trustee is the sole fiduciary in charge of the estate, they need to provide all the services required or know how to outsource the jobs. Who should be named? It could be a long-time attorney who knows the family situation well or a corporate trustee, with the staff to get the job done efficiently and well.

Trust professionals must:

• • Be transparent
  • Be clear about fees
  • Communicate
  • Allow for questions and dialogue
  • Remember that their first responsibility is for the good of the beneficiaries, not for their own convenience or profit. 

Putting a professional in charge of an administration raises the bar for performance of the estate, and provides insurance and professionalism. Even though it displaces the high-performing individual of the family who may assume they should be in charge, it generally comes as a relief in these cases.

2. Split the role

Naming an independent trustee can smooth over these issues. Other times, an understanding and patient family member is paired up with the independent trustee hired from an estate administration law office or corporate trustee firms such as Northeast Private Trustees. Whoever is chosen to be paired up with a family member must have the skills and bandwidth to conduct the business required, and not be merely a longtime advisor.

3. Resign

If you have been named and are honest about what is required of you, you may want to resign in favor of a professional.

Don’t under-estimate the importance of this decision and the impact it can have on your children after you pass.

Have questions about selecting a trustee? Schedule a complimentary appointment with our Trust Officer, Paula Nolan, who can discuss options that are available to you.