Our Advice: How to Pick a Trustee

March 28, 2016

 

Not just anybody can administer wills and trusts in Iowa; there is a certain level of responsibility that goes with this position. It is therefore very important that you choose somebody trustworthy to administer any trust you create. Although many people will feel honored to be chosen as trustee, the job can be quite burdensome, so we always recommend to clients and potential clients that any trustee they are considering be asked in advance. Don’t you want to make sure your chosen trustee is willing and able to perform the trustee duties before while you still have the option?

 

What You Should Look For in a Trustee

 

If you are in the process of trying to choose the appropriate trustee for your own estate, there are some very important qualities you should look for in a trustee. First and foremost, you want to choose a trustee who will be impartial in the administration of your trust. This makes it difficult at times to choose a family member, if it means that sibling rivalries or other family feuds may become part of the administration of the trust.

Having a trustee you can trust to be impartial is just the first step. The trust assets should be insured, in case your trustee does destroy or lose the assets due to negligence. The trustee is also responsible for filing and paying taxes for the trust, as well as taking care of all of the other trust-related expenses that arise. If the trustee does lose or destroy insured assets, there is at least recourse in the court system to hold the trustee liable.

 

The trustee is not just responsible for safeguarding the assets of the trust, but to ensure the trust produces income. Money cannot just sit in a checking account; it must be invested wisely in a manner intended to generate income for the beneficiaries. The trustee is also responsible for then distributing the earned income to the beneficiaries.

 

Trustees and Investments

 

Many states, including Iowa, require trustees to make reasonably prudent choices when it comes to investing trust assets. It is the responsibility of the trustee to use his or her best judgment in choosing an investment agent to handle how investments are made if the trustee is not someone qualified to choose. Speaking to an estates attorney and a financial advisor is often beneficial to new trustees, to ensure they comply with Iowa requirements.

 

Trustee Obligations to Beneficiaries

 

It is also important when choosing a trustee to pick somebody who will administratively keep up with the obligations imposed by the trust. This includes keeping beneficiaries informed about all trust activity, including the role of the trustee, and supplying any backup documentation necessary to keep the beneficiaries fully informed. All beneficiaries are entitled to annual statements about the trust account(s).

 

Other Requirements for Trustees’

 

Whoever you choose to be your trustee must be able to administer your trust impartially, and avoid any real or perceived conflicts of interest. No decisions can be made which favor one beneficiary over another. Proper trust administration in Iowa requires a combination of business savvy, integrity, and communication skills.

 

Whitaker Hagenow & Gustoff Can Help

 

The attorneys at Whitaker Hagenow & Gustoff practice trusts and estates in both Des Moines and Cedar Rapids, as we have offices in both. The experienced estate planning attorneys at the Iowa law firm of Whitaker Hagenow & Gustoff can help you plan your estate in a cost-effective way, and help you choose the all-important trustee to manage your future trust. Call or email us today for an initial consultation.

 

 

 

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