Individual Trustee Considerations – Revocable Trust

Feb 4, 2017 | Trusts

When considering an individual trustee for your revocable trust, always consider whether the individual can perform the duties and has the time and integrity to do the job.  Following is a list of factors to consider when deciding upon an individual successor trustee for your revocable trust:

1.  Honestly and integrity. The most important qualification of a trustee is the trustee’s honesty.  A trustee must work to a standard higher than is commonly seen in business today.

2.  Investment experience. The trustee is responsible for all investment decisions of the trust.  The individual trustee must have an appropriate level of investment skill to make the proper investment decisions or the trustee needs to recognize that competent investment expertise must be hired. Even if an investment professional is hired by the trustee, the trustee must still be able to judge the investment professional’s performance.

3.  Business/administrative know-how. The individual trustee must have the knowledge to understand what must be done to administer the trust. If the trust is running a business or investment activity, the trustee must also have the specialized knowledge to operate the business. If the trustee does not have this administrative expertise, the trustee must hire a professional to provide this knowledge.

4.  Willingness to serve. The individual must be willing to serve and to accept both the responsibility and the liability attendant to their role as the trustee. It is very important that the grantor ask the proposed individual trustee whether the individual is willing to serve. They must be asked beforehand.

5.  Time. Even if an individual is willing to serve as a trustee, the grantor must also consider whether the individual has the time to fulfill the trustee’s responsibilities.

6.  Lack of bias. An individual may not be the best trustee if that person will have to make trust decisions that impact what they will ultimately receive from the trust.

Many people first consider the use of an individual as a trustee, for several reasons. First, an individual knows the family and its needs. Second, it is assumed that an individual will serve for free and therefore be significantly less expensive than a corporate trustee. Finally, many individuals believe that bank trust departments traditionally produce inferior investment returns and are insensitive to the needs of the beneficiaries.

JensenBayles, LLP provides a broad spectrum of legal services.  Thomas J. Bayles has been actively providing advice in the areas of trusts, wills, probate and tax planning in the St. George market for over 18 years. Please visit our web site or call 435-674-9718 and ask for Thomas J. Bayles or Phillip G. Gubler. The information in this article is for educational purposes only and is not intended to be construed as legal advice. Please contact an attorney for legal advice specific to your situation.

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