When a will is admitted to probate, the judge appoints an executor (or administrator, if no named executor will serve) to collect assets, pay debts, and distribute what’s left to the beneficiaries.
Sometimes the beneficiary is a trust under the will (a testamentary trust) or an inter vivos trust (a living trust). Once the estate is distributed to the trust, the executor’s job is done, and the trustee’s begins. The trustee must invest the assets, make distributions, manage the taxes, and account for it all.
The will and the order admitting it to probate establish a testamentary trustee’s authority and duties. Living trusts are governed by the trust agreement.
The probate judge considers potential executors’ suitability before admitting a will to probate, and may reject an application on evidence the applicant is unsuitable. Trustees typically are not reviewed by anyone before assuming their duties.
It is common to let trust beneficiaries serve as their own trustees, especially surviving spouses, or children who have reached thirty or some other suitable age. One or two alternate trustees can be named, too.
A thoughtful trust will also enable use of a corporate trustee, letting the original trustees or even the beneficiaries name a corporate successor or co-trustee. Such language gives an individual trustee the option to delegate or punt altogether if the burden of trust administration becomes too great.
A specific corporate trustee may be named in the will or trust agreement. However, it can be difficult to make an informed selection until the trust is funded and the final assets and family are known. Worse, the corporate trustee that appears perfect today may not even exist tomorrow.
If you are considering a corporate trustee, talk to your estate planning lawyer. There are strategies to selecting a corporate trustee, and the choices you make now as part of your estate plans can add flexibility and minimize expense later.
