A common question I get from clients is, “Who should I name as my trustee?” It’s a decision that carries enormous weight - because the person you choose will manage your assets, handle distributions, and ensure your wishes are followed after you die.
Yet, it’s often made too quickly and without enough thought. Many people assume any family member will do, or they pick a professional trustee without fully understanding the consequences. The wrong choice can lead to mismanaged assets, legal battles, and unnecessary stress for your loved ones.
Today, I’ll break down exactly what a trustee does, how to choose the right person, and how to avoid the mistake that can turn a well-planned trust into a disaster. Stay with me - this decision is too important to get wrong.
Now, just to be clear - I’m a financial advisor, not an attorney, so I’m not here to give legal advice. But choosing a trustee isn’t just a legal formality - it’s a decision that impacts the financial future of your beneficiaries. So, we’re going to look at it from that perspective - how to make a smart financial decision when selecting a trustee.
A trust is only as strong as the person managing it.
Your trustee isn’t just a figurehead - they’re a fiduciary, legally responsible for managing trust assets in the best interests of your beneficiaries while staying compliant with legal and tax rules.
It’s a serious job that requires responsibility, financial oversight, and good judgment. Choose the wrong person, and your estate plan could unravel - leading to costly mistakes and family disputes.
So, what exactly does a trustee do, and how do you make sure you pick the right one? Let’s break it down.
What Does a Trustee Actually Do?
The trustee’s role can be complex, depending on the type of trust and its terms. Here are some of the key responsibilities:
Managing the Trust’s Assets
First and foremost, a trustee is responsible for managing everything inside the trust - investment accounts, real estate, business interests, and personal property. They must handle these assets responsibly, which means:
Making smart investment decisions
Keeping records of all transactions
Ensuring assets are preserved and grow over time
This isn’t just about keeping the lights on - it’s about making sure the trust’s assets last for the beneficiaries.
Following the Trust Terms
Next, the trustee does not have free rein to do whatever they want with the trust. Their job is to follow the instructions you’ve left behind. This could mean:
Distributing income to beneficiaries on a set schedule
Holding assets in trust until beneficiaries reach a certain age
Paying for specific expenses like education, healthcare, or living costs
They also must treat all beneficiaries fairly unless the trust says otherwise. Playing favorites is not allowed.
Handling Taxes, Debts, and Legal Obligations
Another major responsibility is dealing with debts, taxes and legal compliance. This is an area where a trustee cannot afford to make mistakes. They may need to:
Pay off any remaining debts
File and pay trust tax on time
Work with accountants or attorneys to stay compliant
Mistakes in tax filings can result in penalties and even personal liability for the trustee, so this is not something to take lightly.
Communicating with Beneficiaries
Finally, a trustee must keep beneficiaries informed about what’s happening with the trust. This could involve:
Providing financial updates
Answering questions about distributions
Explaining decisions in a way that beneficiaries understand
Good communication helps prevent misunderstandings and family conflicts. A trustee who ignores beneficiaries or keeps them in the dark can quickly create tension - and even legal disputes.
The Mistake Many People Make When Choosing a Trustee
One of the biggest mistakes I see is people naming their oldest child by default.
Just because they’re the firstborn doesn’t mean they’re the best choice.
It’s natural to want to choose someone you trust deeply, and for many families, that instinct leads them to the eldest child. However, birth order does not automatically mean they have the financial skills, patience, or ability to navigate family dynamics required for the role.
Ask yourself:
Does your oldest child manage their own finances well?
Do they have the time to take on this responsibility?
Can they handle family conflicts without creating more tension?
If the answer is no, then choosing them out of obligation or tradition could be a costly mistake - leading to mismanagement, disputes, and even legal action.
How to Choose the Right Trustee
Now that you know what a trustee does, I want to talk about how to choose the right person.
Over the years, I’ve developed a simple framework - a list of key questions I ask my clients to consider when picking a trustee.
And if the person they’re thinking of doesn’t check these boxes, I tell them: keep looking.
Do They Have Financial and Legal Knowledge?
First, do they have financial and legal knowledge?
Now, I’m not saying they need to be a financial expert, but they should at least be:
Smart with money
Comfortable making financial decisions
Willing to work with professionals like CPAs, attorneys, or financial advisors
Are They Responsible and Detail-Oriented?
Next - are they responsible and detail-oriented?
This one is huge. Managing a trust is a job, not a favor. A trustee has to:
Keep accurate records
Handle deadlines and legal obligations
Stay organized and follow through
I’ve heard about trustees missing deadlines, forgetting paperwork, or making emotional decisions that led to real problems—delayed distributions, tax penalties, even family disputes. That’s a recipe for disaster. If the person you’re considering struggles to stay on top of details, they might not be the best fit.
Can They Handle Family Dynamics?
Third, can they handle family dynamics?
Let’s be real - families are messy. And when you throw money and inheritance into the mix, things can get even messier.
Your trustee needs to be level-headed. They can’t be someone who gets sucked into drama or plays favorites. If there’s tension in the family - sibling rivalries, blended family dynamics, or just strong personalities - you need a trustee who can stay neutral, enforce the trust terms, while keeping the peace.
Are They Willing to Serve?
Finally, are they willing to serve?
Being a trustee is a commitment. It’s a job that requires time, responsibility, and patience. So before naming someone, have an honest conversation with them.
Ask them if they’re comfortable serving
Be upfront about the time commitment
Make sure they understand what’s involved
And here’s the thing—if you go through this list and realize the person you had in mind just isn’t the right fit… skip them. Trust me on this. Pick someone who can actually handle the job, even if it’s not the person you originally planned. Your trustee is the backbone of your estate plan - so choose wisely.
Naming a Family Member
I know the temptation might be to pick two or three different family members who have different strengths to balance each other out—one’s good with money, another is super organized, another is great at handling people.
In theory, this sounds like a great idea. But in reality? Co-trustees can be tough.
Here’s why:
Decision deadlocks – If two co-trustees don’t agree on something, it can bring trust administration to a complete stall.
Delays and inefficiency – Every decision requires coordination, which slows everything down.
Unequal abilities – If one person is more engaged than the other, it can lead to frustration or even legal disputes.
If you absolutely must name co-trustees, at least consider an odd number or include a neutral third-party trustee to break any ties.
If you’re worried about tension, consider drafting a letter explaining your decision. That way, if conflicts arise later, your reasoning is already documented, which can help avoid disputes.
Alternatively, instead of naming all your children at once, you can set up a succession plan in the trust document. For example, your oldest child could serve first, and if they can’t or won’t act, the role would pass to the next in line. This ensures continuity without forcing siblings into joint decision-making.
Naming a Professional Trustee
So what happens if, after going through all of this, you realize no one in your family is truly up to the task? Don’t worry – you still have options. You can name a professional trustee instead.
This could be:
A trust company
A bank with a trust department
An independent professional fiduciary
The advantages of choosing a professional trustee include:
Experience in managing trusts
Strict legal and financial compliance
Long-term stability – which is especially useful for multi-generational trusts that need consistency over time
With a professional trustee, you don’t have to worry about family drama, missed deadlines, or financial mismanagement.
Now, of course, there are trade-offs to consider:
They charge fees (which can add up over time)
They may not have a personal connection with your family
They can be less flexible than an individual trustee
But here’s what I tell my clients:
If you don’t have a family member who is 100% capable of handling this role, paying a professional trustee is a small price to ensure your estate plan is executed correctly.
A Hybrid Approach: The Best of Both Worlds?
And if you’re still unsure, there’s another option - a hybrid approach. This means naming a professional trustee alongside a family member to balance personal insight with professional oversight.
What About a Trust Protector?
Finally, there’s one more safeguard you might want to consider: a trust protector. Let’s say you feel mostly confident in your trustee choice, but you still want a safety net—someone who can step in if things don’t go as planned. That’s where a trust protector comes in.
This role comes with the power to:
Remove and replace a trustee if they’re not doing their job properly
Step in if the trustee is mismanaging the trust
Ensure the trust is administered in the best interests of the beneficiaries
Think of it as an extra layer of protection that keeps everything on track. If you’re concerned about potential issues, naming a trust protector can provide peace of mind.
Final Thoughts
Choosing the right trustee is only one part of protecting your legacy. Another key decision? How you want your inheritance to be distributed. If you’re unsure about the best way to divide your estate among your loved ones, check this post where I break down different distribution methods - like per stirpes and per capita - and how they impact your heirs. It’s a must-watch for anyone planning their estate.
Finally, if you’d like us to review your estate plan and develop a strategy for leaving a lasting legacy, feel free to book an Estate Clarity Meeting.
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