Naming a Trustee: Consider the Professional Option
By Melinda Gustafson Gervasi
June 30, 2023
Weekly I work with clients to establish testamentary trusts. A testamentary trust essentially is a will with additional instructions that direct the court to create a trust when the person writing the will dies. Unlike other trusts, this is not created during your lifetime, but rather at your death. They are most commonly used by clients with minor children; the trust is designed to hold and use assets until the children reach an age where they can assume control of the funds. During that time a trustee manages the trust. More specifically, a trustee does the following:
- Invests and manages the trust assets;
- Pays bills of the trust beneficiary;
- Maintains records of all transactions made on behalf of the beneficiary; and
- Files federal and state tax returns associated with the trust.
Many people opt to name the guardian of the child(ren) to serve as trustee. However, in some situations naming a corporate or institutional trustee (such as a bank) might be wise. A professional trustee offers the following:
- Neutrality – unlike the guardian of the child or family member, the professional trustee is not sitting down to a Thanksgiving meal with the trust beneficiary. The relationship is purely professional, removing the chances of decisions being made under emotional pressure;
- Continuity - sometimes a trust is set up to benefit a child for decades. Finding a person in your circle of family or friends to serve as trustee for many years can be daunting if not impossible. Naming a bank or trust department increases your chances that the same entity will be managing the trust assets over the years;
- Experience - a professional trustee spends all day, every day, managing the ins and outs of trusts. They will have years of experience and a depth of knowledge, allowing them to work with the clarity, swiftness, and precision that a layperson may lack.
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