Choose the Right Trustee in Your Will

Physician's Money DigestSeptember15 2004
Volume 11
Issue 17

One of the most important parts ofestate planning is deciding on atrustee for your will. The trusteewill be responsible for carrying out yourwishes regarding management of yourinvestments and other assets. This is a jobthat will often last for years or evendecades. A key trait you should look for ina trustee is sound money sense.


If you have a family member who fitsthis bill, they may be your best choice.The trustee also has theoption of hiring professional investmentmanagers to do the work. They couldeven hire a bank trust department to performmost of the duties normally associatedwith being a trustee. The advantage ofusing a family member as the trustee isthat they are in a position to negotiatefees and change investment managers ifnecessary. They also best understand theneeds of your family members who arebeneficiaries of your trust.

When deciding on possible candidatesfor the position of trustee, be sure to considertheir age. Your parent may have thewisdom you seek in a trustee, but are theylikely to be around for the full term of thetrust? Your best solution here is to name asuccession of trustees, so that if onetrustee is unable to serve, you have selectedtheir successor. You should try to list atleast three or more individuals. If no familymembers have adequate investmentexperience, consider choosing a familymember to serve as cotrustee along with atrusted advisor, such as your accountant orfinancial advisor. This strategy will allowyou to gain the insights regarding theneeds of the beneficiaries, along with theinvestment management expertise.

Because trusts often last for years,after you have selected all the peopleyou can think of as appropriate trustees,nominate a corporate trustee. Alwaysgive someone the right to replace yourcorporate trustee. Typically, this rightshould go to the majority of the trust'sdesignated beneficiaries.

I recall one investor who came to mein tears because her trust officer wouldnever return her phone calls. I reviewedthe trust document and discovered thatthe trust contained a clause that allowedher to move the account to another corporatetrustee. I picked up the phoneand left a message that if she did notreceive a phone call from her trust officer in the next 10 minutes, I intended tomove the account to another trust company.I got the call and now she is regularlyinvited to meetings with her trustofficer. The power to move your accountcreates a lot of leverage.

If you plan to use an individual trusteeinstead of a professional or corporatetrustee, be sure to ask them if they wouldbe willing to serve. Being a trustee is a significantresponsibility and not a decisionthat should be taken lightly. Often, familymembers are asked to serve without compensation.Because of the time andresponsibilities involved, your will shouldprovide the trustee the option of receivingappropriate compensation.

®, AEP,

founder of The Welch Group, has

been rated one of the nation's top

financial advisors by Money and

Worth. He is the coauthor of J.K.

Lasser's New Rules for Estate and

Tax Planning (John Wiley & Sons, Inc; 2002). He

welcomes questions or comments from readers at

800-709-7100 or This

article was reprinted with permission from the

Birmingham Post Herald.

Stewart H. Welch III, CFP

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