Selecting the Trustee

Most people who set up revocable trusts name themselves to serve as the initial trustee. A successor Trustee (either a family member, a corporate Trustee such as a bank or trust company, or a combination of both) is then named in the trust agreement to take over in the event of incapacity or upon death. This is a very important position and much care and thought should be given to it. Following are some considerations:

a.	Individual Trustee

	Advantages:
1.	May have a high degree of intimacy with the family's personal and financial status.
2.	Familiar with the workings of the small or closely-held business.
3.	May serve without compensation.
4.	Has the respect of family members.
	Disadvantages:
1.	The individual trustee is human. Illness, personal or business problems and death can destroy the relationship.
2.	If the individual does not possess knowledge in key areas of trust administration, the fees of accountants, attorneys, and investment counsel could be more than the charges of a trust company.
3.	The family relative who serves as trustee could see his family relationship destroyed because of arguments over favoritism.

b.	Corporate Trustee

	Advantages:
1.	Guaranteed experience.
2.	Greater resources available at its disposal than individual.
3.	Does not get sick or go on vacation.
4.	Regulation internally and externally gives a level of assurance of the trustee's independence and honesty.
5.	Impartial decision making.
	Disadvantages:
1.	Too expensive for smaller trusts.
2.	Trust officer may be unfamiliar with the special needs of a beneficiary
3.	Does not possess the ability to manage closely-held businesses.

c.	Practical Considerations
1.	Size of the trust: a corporate trustee's fees may be expensive for a smaller trust.
2.	Nature of the assets: a closely-held business may be better managed by an individual trustee who is familiar with the business.
3.	Relationships between the proposed trustee and beneficiaries.
4.	An individual may be unable to act by reason of disability or death. Consider the age and physical condition of the person being selected.
5.	An individual candidate should possess the competence to act, including the ability to properly invest trust assets and otherwise administer the trust impartially for the benefit of the current and remainder beneficiaries.
6.	A family member may have a conflict of interest between his duties as trustee and his personal interest as a beneficiary.
7.	The trustee should have some knowledge about the settlor's intentions and be familiar with the family's personal and financial situation.
8.	The burdens of investment and administration should not be too complex or time consuming for a trustee.
9.	Will the trustee be willing to assume the liability of serving?
10.	Although an individual named as trustee might be willing to serve without compensation, this savings might be offset by the need to retain attorneys, accountants, investment advisors and other agents.
11.	A corporate trustee may be unable to manage trust assets in another state.
12.	Qualities to look for:
	Honest and trustworthy
	Experience with financial and trust matters
	Wisdom
	Stable and dependable
	Has time and energy