Selecting a Trustee: A Delicate Balance of Trust and Competence

Selecting a trustee dictates the success of your estate plan. For revocable trusts:

• Grantors typically serve as the initial trustees, maintaining complete control over the assets.
• Successor trustees are designated to assume control upon the grantor’s incapacity or death.

For irrevocable trusts, the choice is more permanent. The trustee can be an individual (a family member, friend, attorney, or private fiduciary) or an institution (a corporate trust company).

Key selection criteria:

Administrative and Financial Competence

The trustee must file annual trust tax returns (Form 1041 under IRC §641 for non-grantor trusts or comply with grantor reporting under IRC §§671–679) and manage investments under the Prudent Investor Rule.

Fiduciary Integrity

The trustee must manage assets solely in the interests of the beneficiaries, avoiding conflicts of interest.

Availability

Trustee duties require significant time, from asset accounting to coordinating distributions. Individual trustees may serve without fee, while corporate trustees charge an annual asset-based fee (typically 0.5% to 2.0% of assets under management).