When a will is created, the person making the will (the testator) nominates a personal representative to administer the testator's estate. This person is typically called the executor. The testator may also nominate a trustee to manage assets that are left in trust to beneficiaries of the estate, such as a minor or someone with a disability. The trustee and the personal representative have different roles. However, the same person may serve both functions. The trustee is generally granted the power to make decisions on the distribution and management of estate assets that are included in the trust.

Many states have statutes that define the duties and powers of trustees and most states allow a testator to further tailor the duties and powers of his or her trustee in his or her will. However, trustees have the following general duties:

  • A duty to administer the trust in compliance with the trust provisions
  • A duty not to delegate his or her responsibilities to others
  • A duty to be loyal to the trust beneficiaries
  • A duty to keep trust assets separate from the trustee's personal assets
  • A duty to exercise reasonable care and skill in handling the trust assets
  • A duty to account to the beneficiaries

Selecting a Trustee

A trustee has numerous important functions with respect to the administration and distribution of the estate. It's important to consider these functions when deciding whom to name as a trustee or as co-trustees. The trust provisions should provide a mechanism for selecting successor trustees in the event that a trustee is unable to serve or if the trust is expected to continue for a long duration. If a trust is to be created for charitable purposes and may last in perpetuity, then consideration should be given to naming a corporate trustee.

When selecting a trustee, it's important to select a person whose judgment you trust. The trustee need not be sophisticated in all accounting, financial, legal and tax matters, so long as the trustee knows when to seek counsel from an accountant, financial adviser or attorney. In addition, the fees that an individual or corporate trustee would charge and whether an individual trustee would serve without being paid are important factors to consider.

Trustees may be selected by their ability to manage funds as well as by their knowledge of the beneficiaries, which can help them determine when distributions should be made. The purpose and duration of the trust as well as the investment and other responsibilities of the trustee are some of the factors to be considered when selecting a trustee. In some cases, you may want to consider separating responsibilities and having two or more trustees, one whose role is to invest funds and the other whose role is to distribute them. Consideration should be given to whether naming a corporate trustee is appropriate. The trustee must be familiar with applicable trust law, including the trustee's duties, powers and liabilities, or should retain counsel to advise the trustee as to such law.

In selecting trustees, you should make certain that there are no legal disabilities that would restrict the desired trustees from serving. For example, a convicted felon may not be qualified to serve as a trustee.

Questions for Your Attorney

  • What happens if the trustees I choose are unable to serve?
  • Does my state have any restrictions regarding who may serve as trustee?
  • Should I nominate a corporate trustee?