An Independent Successor Trustee

December 3, 2013. The inclination of most grantor’s in selecting successor Trustees is often to choose family, and usually children. For reasons of comfort, trust, and cost, this makes some kind of sense. The child chosen, if a solo Trustee, likely knows the parents well and is in tune with their wishes. There is also maybe a naïve understating that the child and their siblings get along and will continue to get along after the parent’s death. The hard truth is that after the grantor’s passing, there is usually some amount of disagreement if not outright fighting between siblings. And, when one sibling is in charge of administering a Trust, they are likely going to be the target of particular scrutiny, breeding more division.

I think this is one decently compelling reason for going outside one’s family for a Trustee, the fact that if there is a fracture in the family, the stakes and responsibilities will make it a fissure. The more compelling reason is the burden the role places on the individual chosen to serve. The role of Trustee, even of only a moderate corpus, can quickly become a full-time endeavor. This is often in conjunction with whatever profession they pursue to make a living. Realize also that most of the responsibilities accompanying the role will be completely alien to them: allocating income and principal, regulating distributions, making accountings, etc. They also will likely be unaware, in a strict and technical sense, of their fiduciary obligations until they include a lawyer in the process, which they often only do very late. Not to mention, depending on the mistake made, the child could be personally liable. Lastly, while they will usually have to ability to fairly compensate themselves, often they will not since there will be criticism from other beneficiaries.

A ready answer for these pains is for the successor Trustee to be an independent professional. The person will only employ their disinterested judgment, be thoroughly familiar with the role, and markedly aware of the requirements and responsibilities. It takes a great deal of responsibility off of the child a grantor would instinctively choose. There is some concern as to the cost of employing a Trustee, but it is fairly moderate and not unreasonable for even medium sized estates. Another concern is that once an independent Trustee is put in place, that is it, for better or worse. However, with inclusion of a Trust Protector provision (see the last blog), the independent Trustee may be removed and replaced with someone more appropriate as the circumstances dictate. To learn more about the services that Goosmann Trust Law Counsel provides, visit our website at www.trustlawcounsel.com, email info@goosmannlaw.com or call 712.226.4000.