Choosing a trustee.

• Author: Ellentuck, Albert B.
• Position: Case study

Facts: Ruth Warrick has decided to contribute some of her assets to a trust for the benefit of all her children. She asks her tax adviser about some of the traits to look for in choosing a trustee. Issue: Which characteristics are desirable when selecting a trustee? The adviser provides the following checklist to aid Ms. Warrick's decision.

Selecting a Trustee

Once a donor decides to use a trust as a vehicle for gift giving and selects the property to be transferred, a trustee must be selected. The donor may want to be the trustee and maintain control over the investment decisions and distribution of trust assets. However, for both tax and nontax reasons, a third-party trustee (and, in many cases, a corporate trustee (e.g., a bank)) may be preferable.

Desirable Characteristics of a Trustee

* Willingness and ability to devote the time necessary during the trust term.

* Good judgment and decision-making ability.

* Integrity.

* Adequate financial, business, tax and legal knowledge.

* Financial security.

* Fairness and impartiality (no conflicts of interest).

* Accurate understanding of grantor's goals.

* Knowledge of individuals involved with the trust (i.e., personalities).

* Knowledge of any "ancestral" assets to be placed in trust.

* Adequate administrative ability, attention to detail and flexibility.

* Capability of working with professional advisers the trust may hire.

* Discretion in confidential matters.

* Adequate proximity to trust assets and beneficiaries for the trust term.

* Previous experience as a trustee.

* Willingness to surrender trusteeship to a...