By EILEEN M. MCCAULAY, J.D., CTFA, Senior Fiduciary Officer

When considering the appointment of a Trustee in connection with your estate plan it is vital that careful consideration be given to the selection of your Trustee. The duties and responsibilities of an individual Trustee can be technical, burdensome and time-consuming.

A Trustee is a Fiduciary role with a duty to follow the terms of the trust, which may include the following items:

  • Control and preserve property
  • Make property productive
  • Provide an accounting to the interested parties
  • Select investments under a Prudent Investor standard (unless the trust document provides more specific terms)
  • Protect the confidentiality of the trust from outside third parties
  • Enforce claims on behalf of the trust
  • File state and federal fiduciary tax returns
  • Fulfill a duty of loyalty to avoid conflicts of interest and self-dealing

While the above list of duties and responsibilities is long, it is not comprehensive. A Trustee may also need to manage real estate, run a family business, or even care for the needs of a disabled person. A Trustee may also be managing a charitable foundation. Finding the right Trustee for the purpose of each specific trust is key to having successful results.

Some people prefer to appoint a Trustee within the family’s inner circle. It is important to remember that a Trustee must be impartial and retain the objectivity to make decisions based on facts and law rather than personal feelings. Appointing one child Trustee over another may result in unintended consequences and family conflict.

It is equally important to plan for the role of a Successor Trustee to replace an existing Trustee in the event of death or incapacity. Many people select a Corporate Trustee for this role to ensure a smooth transition. A Corporate Trustee will be experienced with the technical aspects of trust administration but may benefit from having a family member serve as a Trust Protector or Trust Distribution Advisor to provide important family information pertinent to the administration of the trust.

The liability of a Trustee must also be considered should a conflict arise. If it is determined there was a breach of duty as trustee, one could be held personally responsible. Deadlines for administering a trust must be met, tax returns must be filed, trust terms must be followed or a beneficiary may make a valid claim.

Many trusts are designed to provide flexibility to accommodate the changing needs, goals or objectives of the Grantor of the trust. If you are re-considering the selection of your Trustee, please contact your Oxford team of advisors to review the many options available to your family.

The information in this presentation is for educational and illustrative purposes only and does not constitute investment, tax or legal advice.