Setting up a trust is one thing. Choosing the person who will be in charge of investing the assets within the trust is another. That person must be skilled at maintaining records, handling taxes and staying on top of payments to the beneficiaries of the trust. That person is the trustee, and he or she will usually be a family member, trusted friend, financial professional or perhaps yourself. Alternatively, hybrid trusts exist in which a Texas trustee is named to administer the trust, but a financial professional is hired to invest the assets.
It is important to realize that being the trustee of a trust is a job. Indeed, the trustworthiness of the trustee selected is important but so is that person's reliability and ability to carry out the functions of that job. The trustee is bound by the law to follow any directions set out in the trust agreement, and he or she must always act in accordance with the trust's best interests.
Before choosing a trustee, one must consider the type of trust being created. For example, if it is a living trust, then you yourself may wish to be the trustee until the moment of your death, when a trustee that you name will take over. If the trust is what is known as a testamentary trust, set up in a will to be established after death, then a trustee will most definitely need to be named.
When a trust is anywhere from small to medium-sized in terms of its assets, it could be a good decision to choose a family member to manage it. On the other hand, if the trust is large or contains complicated assets, then a lawyer, financial adviser or banker may be the better choice. If the trust is meant to operate in perpetuity for generations to come, then a professional trustee will probably be the smartest choice.
Professional trustees are typically costly to employ, and earn from 0.75 percent to 2.5 percent of the trusts assets per year. Therefore, for smaller trusts individuals may choose a relative as trustee. Whenever making decisions about a trustee selection or planning at trust, Texas residents may benefit from professional legal advice on the matter, which can limit the chances of further complications developing later on down the road.
Source: Time, "How To Pick a Trustworthy Manager for Your Trust", Kerri Anne Renzulli, Oct. 15, 2014