In last week’s blog post in our ongoing series on basic questions about estate planning, we looked at trusts, but we didn’t ask many questions about the trustee. Today we’re going to do just that. A trustee is someone who plays a vital role in any estate plan, regardless of the type of trust you create. Understanding why the trustee is so important, what responsibilities that person has, and what you need to do to choose the proper trustee that fits your needs is absolutely essential if you decide that creating one or more trust is something you want to do when you create an estate plan. So, here are several questions about trustees, what they do, and why they are important.
What is a trustee?
If you remember from our previous discussions, a trust is a type of legal entity that can own property. When you create a trust you take some of the property you own in your name and transfer it into the trust’s name so the trust becomes the new legal owner. However, since you no longer own the property, you have to have someone who will manage it. That person is known as the trustee. As the person who creates a trust, called the grantor or settlor, you have the responsibility to choose who you want the trustee to be.
Note, however, that the trustee does not own the trust property either. The trustee is there to ensure that the property the trust owns is properly managed on behalf of the beneficiary. The beneficiaries, whom you also name when you create the trust, have the legal ability to use or benefit from the property the trust owns.
Who will the trustee be?
Depending on the type of trust you want to create, or the types of responsibilities you want the trustee to have, you can choose an individual trustee, multiple people as co-trustees, or even an organization to serve in the role of trustee. In some situations, such as when you create a revocable living trust, you can even serve as the trustee of your own trust.
Choosing the right person or organization to serve as the trustee is one of the most important steps you have to take when you create a trust. Though there is no single right answer to the question of who your trustee should be, there are factors you will need to consider when making your selection. Your estate planning lawyer will help explain what the factors are, and guide you through the process of choosing a trustee who is right for your needs.