into the shoes of the person who created the trust to play an important role. But is the role right for you? Are you up for the job?
You may feel flattered if asked to serve as trustee of a friend or family member’s trust. After all, being
chosen as trustee probably means you are considered trustworthy and responsible.
Flattery aside, it is important that you do not let that feeling cloud your judgment.
You need to know what you are getting into before you say yes.
Morningstar recently published an article titled "6 Tips for Family Trustees."
While you will want to read the original article, here is an overview of those six tips:
1. Professional Help - A trustee has a lot of responsibilities, including interpreting trust documents,
investing trust assets, distributing income and filing tax returns. If you are not an expert, you
might need help from one.
2. Impartiality - A trustee must be impartial in any disputes between beneficiaries. If you cannot
do that, then being a trustee might not be for you.
3. Investing is Difficult - You cannot necessarily invest trust assets as you would invest your own.
Trust assets need to be invested with the interests of beneficiaries in mind.
4. Personal Liability - If you mismanage a trust, you can be sued and potentially be held personally
5. No Fun - Managing a trust is hard work and often tedious. Do not expect to enjoy it.
6. Escape Hatch - Before saying yes, make sure the trust is drafted in such a way that you can
easily resign as trustee should you need or want to.
Consult an experienced estate planning attorney to help you understand the implications of agreeing to
serve as a trustee.
Even if you say “yes,” make sure the trust authorizes you to hire outside experts to assist with the
administration details like tax returns and investing.
Reference: Morningstar (June 28, 2015) "6 Tips for Family Trustees"