A spouse is often the first person married couples think of when deciding who should manage their children's assets. The choice can make sense because a spouse understands the family, knows the children and may share the same goals for their future. However, those advantages do not necessarily make a spouse the right trustee in every situation.
A trustee must manage trust property, follow the trust terms, make appropriate distributions, maintain records and act in the beneficiaries' interests. Choosing the right person requires considering whether the proposed trustee can handle those responsibilities over the life of the trust.
A trustee's responsibilities can vary depending on the trust's terms and the assets involved. The role may include overseeing investments, managing real estate, making distributions, maintaining records, communicating with beneficiaries and handling other administrative matters.
The trustee must also follow the instructions established in the trust document. That can require making decisions when circumstances arise that were difficult to anticipate when the trust was created.
For a trust established for children, those responsibilities may continue for many years. The person selected, therefore, needs to be willing and able to stay involved, not just someone the family trusts personally.
A spouse may have an intimate understanding of the family's circumstances and the parents' wishes for their children. That familiarity can be valuable when decisions need to be made about distributions or other aspects of trust administration.
At the same time, personal relationships can complicate financial decisions. A surviving spouse may have competing financial needs, different priorities, or strong emotions surrounding the children and their inheritance. Those circumstances do not automatically prevent a spouse from serving as trustee. However, they are worth considering when creating the trust.
The trustee should also have sufficient time, organizational ability, financial judgment and willingness to accept the legal responsibilities of the position.
The appropriate trustee can depend heavily on what the trust will own and how long it is expected to operate. A relatively simple trust may require less administration than one holding investment accounts, real estate, business interests, or substantial assets.
The age of the beneficiaries also matters. A trust established for young children may continue well into their adulthood. A trustee who is appropriate today may not be the best choice decades from now because of age, location, availability, or changing family circumstances.
Naming a successor trustee can help address those changes before they become a problem.
A trust does not always have to rely on one individual. Co-trustees can combine different strengths, such as a family member's knowledge of the beneficiaries with another person's financial or administrative experience.
This arrangement can also create an additional layer of oversight. The trust document should clearly establish how responsibilities are divided and how decisions are made. However, adding multiple trustees can create its own administrative challenges.
Another option is to name a successor trustee who can take over if the original trustee can no longer serve. Planning for that transition matters, especially when a trust is intended to remain in place for many years.
Trustee selection need not be a permanent decision. Family relationships, financial circumstances, geography and beneficiaries' needs can change substantially over time.
A trust established when children are young may look very different once they become adults. The original trustee may also become unavailable or less suited to the role. Reviewing successor provisions and other trust terms periodically can help keep the administration aligned with the family's circumstances.
The goal is to choose a structure that can continue functioning even when the people and circumstances surrounding the original estate plan change.
Trustee selection is ultimately about more than determining whom the family trusts personally. It requires considering the actual duties involved, the assets being managed, the beneficiaries' needs and the expected duration of the trust.
A spouse may be an appropriate trustee in many families. In other circumstances, a co-trustee, successor trustee, or different individual may provide a structure that better addresses the responsibilities involved. Reviewing these choices as part of the overall estate plan can help ensure that the trust operates as intended.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. We help individuals and families establish living trusts, wills, powers of attorney, advance healthcare directives, and other essential estate planning documents designed to protect their loved ones and preserve their legacy. Schedule a quick and easy consultation with estate planning attorney Sedric E. Collins, Esq., or call 323-900-5450.
