Investopedia/Donna Fuscaldo: How to Identify a Good Trustee

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How to Identify a Good Trustee
By Donna Fuscaldo | Updated July 11, 2016 — 5:14 PM EDT
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Estate planning can ensure your heirs are taken care of but who you are going to trust to execute your wishes is equally as important.

If you choose the wrong trustee, there can be intentional and unintentional mistakes that will cost your beneficiaries. Consequently, it's important to be scrupulous when selecting a trustee.

 Trustees are held to a fiduciary standard which means they have to put your best interests first. Still, there are a few ways they can mess up. Some mistakes are unintentional and are due to carelessness or neglect and then there are those intentional and potentially financially draining moves like commingling a trustees finances with that of the estate or a conflict of interest that muddies the fiduciary standard. Either scenario is bad news for your heirs which is why choosing a good trustee is just as important as divvying up your assets.
Pick a Knowledgable Trustee, Who Isn’t Afraid To Ask For Help

Knowledge is power, and that applies especially to the trustee you select but knowing when to call for help can be invaluable when deciding on a trustee to go with. Sure you want them to have financial, and business sense, but you don’t want someone who thinks they know everything and as a result, won’t pay too much attention to your wants and needs or ask you questions if they require further insights. If you don’t have a family member of close friend that fits the bill, there are independent companies that will act as your trustee. While they aren’t free, they can be a good alternative if you can’t think of a good trustee candidate or your family situation is complex.
Make Sure The Person Will Be Around After You

Taking on the role of trustee is a big responsibility and requires a lot of time and commitment. To minimize the chances of confusion you have to be upfront with your trustee so he or she knows exactly what you want and what his or her duties will be and for how long.

Relationships can easily fray over the years and someone who you trusted in your 40s when you created your estate plan may not be so appealing in your 60s, particularly if that person is busy and has little time for you and your trust. It's also important to consider your potential trustee's health and location. Your uncle may be a trustworthy financial whiz, but if he lives across the country or is getting older, he may not be the ideal trustee when it comes time to execute your plan. (Read more, here: Can You Trust Your Trustee?)
Check Up Periodically

Once you’ve found your trustee, it’s a good idea to recheck your choice periodically to ensure everything remains the same. You want to make sure your trustee is still of sound mind, his or her health is good, and is still trustworthy. If you can’t check off all the boxes during your checkup, it may be time to find a new trustee. The last thing you want is for your wishes not to be executed, not because you weren’t clear, but because you chose the wrong person to trust. (Read more, here: Estate Planning: Introduction To Trusts.)
The Bottom Line

Estate planning is half the battle but choosing the right trustee wins you the war. Without a trusted trustee intentional and unintentional mistakes can happen that can ruin even the best thought out plan.
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