12 Mistakes To Avoid When Choosing a Trustee To Carry Out Your Final Wishes

A trustee is the person — or sometimes the institution — responsible for managing your trust and making sure your money and assets are distributed according to your wishes. They're also a vital part of your estate planning process if your goal is to build wealth and preserve it for future generations.

Unfortunately, it's easy to make some common mistakes when choosing a trustee. Whether it's outright negligence or an accidental oversight, these missteps can have a similarly devastating impact. 

Here are some of the most common pitfalls to avoid when naming a trustee.

While having a trust can eliminate the need for an estate if all of your assets are placed into it, many people leave behind a trust and an estate with different assets held in each, believing that the trustee will also automatically be named as the executor. 

Instead, probate judges often give priority to a surviving spouse, which may or may not be what you were hoping for.

One of the biggest mistakes people make is failing to name an executor. If you skip this step, the government will decide who settles your estate, and it may not be someone you would've picked yourself.

Even if you've carefully selected your trustee or executor, life happens. The trustee may decline the role later or become unable to serve. Without a named successor, the state steps in to pick a replacement, and you lose control over the outcome.

To avoid this many legal experts suggest picking another person who will serve as backup in the event that your original choice falls through.

There's more than one way to structure your trust. You can choose an individual trustee, co-trustees, a corporate trustee, or a mix of options.

While using a corporate trustee to handle the technical aspects and an individual trustee for personal guidance is a common and effective strategy, it's important to understand the different trustee types and their roles when deciding how to proceed. Multiple trustees must work closely together to avoid surprises or court involvement, and choosing the wrong combination could make things complicated when it comes time to settle your affairs.

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Trustees aren't just ceremonial figureheads. They oversee important work, and the role carries legal and financial risks.

If they fail to act in the beneficiaries' best interests, they could be personally liable for financial losses. Before making your choice, ensure the trustee is trustworthy, exercises good judgment, and has adequate liability insurance.

It's tempting to choose a loved one for this role, but emotions should never take precedence over qualifications. Even a well-meaning family member might not have the expertise or time to manage things properly.

Instead, you should prioritize skills and reliability over personal closeness or social norms. It might mean bypassing your firstborn and creating awkward feelings, but protecting your legacy (and your family's) is far more important.

Many articles about trusts suggest you need to select a trustee young enough to manage the trust for its full duration. While selecting a 90-year-old with declining cognitive abilities is not a great idea, a well-structured trust is often built to last for several generations. 

If a trust is designed to last for 100 years or more, it's virtually impossible to select a trustee who can offer that sort of longevity.

The trustee does not need to outlive the trust. Instead of focusing on the trustee's age, prioritize planning for consistency during the transition. This could include appointing a corporate trustee or regularly updating the trust's successor trustee.

When a trustee stands to benefit from the trust's decisions, it creates a conflict of interest. Not only would their appointment be controversial, but their decisions could lead to biased management — or even just the appearance of it — which could cause vicious family fights.

In some families, there may be a clear choice for who should take the helm. In others, a neutral third party may be a much better pick when it comes to maintaining fairness and integrity.

No one goes to school to become a trustee, but there are certain personal qualifications to look for. Trustees should have financial know-how, organizational skills, basic legal understanding, and the ability to learn and acquire new skills — including information buried in dense legal language.

If you don't have a family member who fits the bill, going with a professional trustee could be a smart move.

Even the best trustee can't read minds. Spell out clear directions about how assets should be managed and distributed. Specific, written guidelines minimize confusion and reduce the chance of future disputes among beneficiaries.

If your beneficiaries include minors or incapacitated adults, select a trustee who can work smoothly with any guardians. Otherwise, interpersonal conflicts could derail your intentions, especially when it comes to major decisions like housing, healthcare, or education.

Don't assume your appointee can just rise to the occasion. Ask important questions: Are they financially savvy? Do they have a history of mismanaging funds? Are they local, or will distance complicate tasks?

Your trustee should be trustworthy, practical, and aligned with your values.

Life changes. As your situation evolves, so should your trust and estate plan. Periodically review your trustee selection to make sure it still makes sense amid evolving circumstances. What worked five years ago may not be the best fit today.

In the event of a divorce, for example, an existing trust may need to be dissolved.

It doesn't matter whether you have lots of wealth, own your home, or have a child with special needs, there are plenty of good reasons to consider setting up a trust.

Selecting the right trustee is one of the most important steps you can take to protect your wealth and secure your family's future. Avoiding these common mistakes ensures your estate is managed responsibly and according to your wishes, even after you're no longer around to manage things.