Appointing a Trustee? Consider a professional.
September 26, 2022
A trustee is charged with protecting and investing trust assets and administering those assets per the terms of the trust agreement for the benefit of the trust’s beneficiaries. See Fla. Stat. 736.0801 et seq.
While this sounds like a basic premise, there are some important functions which a trustee must do in their fiduciary role. Some of the aspects involved with protecting the trust’s assets and abiding by the trust terms include some of the following, which is, of course, not an exhaustive list: (a) investing trust funds using what is called the “prudent investor standard”, (b) monitoring investments, (c) communicating with trust beneficiaries and resolving any conflicts amongst beneficiaries (d) making discretionary decisions, distributing trust funds, and approving or denying distributions if given any discretionary authority in the trust itself, (e) keeping accurate and detailed trust books and records, and (f) paying taxes for the trust, which may involve hiring professionals like accountants and lawyers. See Fla. Stat. 736.0802 through 736.0812.
If a trustee has special skills or expertise, then the trustee is to use those skills or expertise. Fla. Stat. 736.0806.
A professional trustee may be something to consider, because sometimes settlors chose a family member or friend who may not be the right person for the job, or who may not be willing to do the job. A professional trustee, unlike a family member or friend, would be familiar with the state and federal laws applicable to the tax side of the trust administration. Moreover, a professional trustee would have the familiarity with trust investments and the knowledge to get them to perform in a way to benefit the trust beneficiaries. In addition, a professional trustee would be more likely to be objective in deciding whether a discretionary distribution should be made, unlike a friend or family member who may know that beneficiary personally. One other facet to consider, particularly in knowing a beneficiary personally, is that a trustee may feel compelled to take a side one way or another in trying to resolve conflicts amongst beneficiaries, when a trustee is supposed to be administering the trust per the trust document for the benefit of the beneficiaries.
In setting up your estate plan with your trusted estate lawyer, you should discuss your selected trustee and consider whether that person is the appropriate fit for the job, or whether a professional trustee may be a better fit in your particular set of circumstances.