As you begin the estate planning process, you may discover that creating a trust is the best option for you and your beneficiaries. If you choose to create a trust, you as the grantor must name someone to serve as a trustee for the trust. The trustee will have the responsibility of carrying out your wishes and handling your estate after you pass away.
Who can be a trustee?
Generally, any adult (person 18 years of age or older) can serve as a trustee. Some options include:
- Family members
- Close friends
- Professional or institutional trustees
- Co-trustees (one individual and one institutional entity)
Factors to consider when selecting a trustee
Not everyone is capable of or willing to handle to responsibilities that come with being a trustee. The person you select as trustee needs to be trustworthy, organized, knowledgeable about finances and Florida estate planning laws, and able to make difficult decisions if necessary.
When you are selecting a trustee, you should consider the following factors:
- The trustee’s location (trustee’s residence can impact income taxation of the trust)
- Whether the trustee is willing and able to keep careful records of the trust
- Whether the trustee has a conflict of interest
- Whether the trustee has time to serve as trustee
- Whether the trustee will act in good faith at all times
- Whether the trustee will be able to keep personal feelings aside and treat all beneficiaries fairly
- Costs of selecting a corporate trustee
Choosing an individual trustee can be beneficial in that they may be able to truly understand your family in a way a bank or other corporate trustee never could. On the other hand, corporate trustees will likely have a better understanding of how to manage a trust and will be more objective throughout the process. Also, while individual trustees may be held personally liable if something goes wrong (e.g. mishandling of the assets), even unintentionally, while a corporate trustee will have the resources to avoid these issues and insurance to protect against liability.