Naming a trustee to oversee a minor’s inheritance is perhaps the most important decision a grantor will make. The most logical choice for a trustee of a minor’s trust may be the minor’s parent or guardian. However, a parent or guardian may be overwhelmed by the day-to-day responsibility of raising a minor child and may not have the time or the skill set needed to serve as a trustee. Naming another relative or trusted friend may be a good alternative, although a growing number of grantors are opting for professional fiduciaries. Here are some counseling tips for choosing the trustee:
Expertise is not required. A trustee is a fiduciary required to perform certain tasks and bound by duties owed to the trust’s beneficiaries. However, the individual selected need not be in the financial industry to be qualified to serve as a trustee. It is important to select a trustee with good judgment and common sense. For example, the trustee must be comfortable doing research and asking for help.
Consider the trustee’s age. Because a trust for a minor is likely to be administered for a significant length of time—decades or longer—it is prudent to consider the age and health of a potential trustee. Naming multiple successor trustees and revisiting their appropriateness is critical.
Consider the team approach. In some circumstances, naming more than one trustee may be appropriate. Some benefits of having co-trustees are the sharing of administrative duties and preventing one person’s judgment from controlling all decisions and distributions. Drafting co-trustee provisions to alleviate administrative hassle (are both signatures required to conduct business on behalf of the trust?) and prevent conflict (if there are only two trustees, who will settle a stalemate?) is imperative. The role of trustee can also be split by having one trustee who is responsible for distribution decisions while having a second trustee be responsible for investment decisions.
Sometimes a professional trustee is best. When the trust contains a large amount of money or there are concerns about family conflicts, a professional or institutional trustee may be best.