How to Choose the Right Trustee

When it comes to setting up a trust, picking the right trustee is like choosing a captain for your ship. They’ll navigate your assets and make sure everything runs smoothly according to your wishes. That’s where the Massih Law, LLC “CEO” Theory comes in handy—a simple yet effective guide to finding the perfect trustee. Let’s break it down:

  1. Acting Like a CEO: Your trustee needs to be a proactive decision-maker. They can’t afford to procrastinate, especially when it comes to managing investments, meeting beneficiary needs, tax planning and filing, etc. Being on the ball ensures your trust stays on course.
  2. Getting Expert Advice: Nobody knows everything, and that’s okay. A good trustee knows when to call in the experts—legal, tax, financial whizzes—to help make the right decisions. It’s like having a board of advisors to steer them in the right direction.
  3. Making Smart Calls: Trustee decisions should be like a well-thought-out business strategy. They need to weigh the advice they receive, make reasonable choices, and always keep the purpose of the trust in mind.

Now, let’s talk about the big choice between family and independent trustees:

Family Trustees vs. Independent Trustees:

  1. “Family” Trustees: These are folks close to you—relatives or trusted friends (chosen family)—who take on the trustee role. They might not have all the fancy credentials, but they bring a personal touch to the table.
    • Pros:
      • Personal Connection: Family trustees should know you and your beneficiaries inside out. That can make communication smoother and decisions more in line with your wishes.
      • Cost-Effective: They might do the job for less than an Independent Trustee (albeit this is not guaranteed), saving you some bucks on trustee fees.
    • Cons:
      • Potential Conflicts: Balancing family ties with fiduciary duties can get tricky. It’s easy to blur the lines between personal and trustee roles.
      • Harder to Find the Right Person(s): Your cousin might be great at family gatherings, but they might just not be a good CEO. Most of us do not have a lot of people in our lives who fit these characteristics. A person can be very smart, successful, or both, and yet be a terrible CEO.
  2. Independent Trustees: These are pros—banks, trust companies, or individuals with no familial connections (often times an Attorney or CPA) —who handle your trust affairs like a boss.
    • Pros:
      • Impartiality: Independent trustees bring an objective viewpoint, free from family drama or bias. That can be crucial for making fair decisions.
      • Expertise: They’re the pros for a reason. Independent trustees should know their stuff when it comes to trust law, investments, and all the nitty-gritty details.
    • Cons:
      • Price Tag: Quality comes at a cost. Independent trustees usually charge fees, which can eat into your trust’s assets, earnings or both.
      • Lack of Personal Touch: They might be experts, but they won’t have that family vibe. Communication might feel a bit more formal. Furthermore, experts can make mistakes too. Knowing less about individual beneficiaries could result in a conflict between what actually should be distributed to that beneficiary versus what is being distributed to a beneficiary.

In a nutshell, choosing a trustee boils down to finding someone who fits your trust and situation like a glove. Whether it’s a family member or an independent pro, they need to embody the CEO qualities—making smart moves, seeking advice when needed, and always having the purpose of the trust and the beneficiary’s interests at heart. So, take your time, weigh your options, and trust your gut. With the right trustee at the helm, you can have piece of mind that your trust beneficiaries will be provided for the way you intended.