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Should I Name A Child Trustee

Trusts are increasingly more and more common. As more people create trusts however, more of them are ending up in litigation.

Estate litigation can happen when family members disagree with each other over a trust created by a parent or other family member. Of course estate litigation also happens between non-family members but that is less common.

Often times, a parent names one of their children as the trustee of their trust. That child is usually the oldest or most educated or chosen for some other specific reason. The parent does not know they are setting up a situation that could lead to a fracture of the relationship between their children and an expensive situation down the road.

Ask yourself this – does the child you are considering naming as trustee know what is required of them as trustee? The answer is almost definitely no. Do they know they are required, within 60 days of the death of the creator, to give specific notices to the heirs and beneficiaries? Do they know they will need to get a tax-id number and file a tax return for the trust? Do they know they are considered a fiduciary and held to a higher standard than if they were managing their own money? Are they aware they will have to keep detailed records and account for their actions?

Most people feel honored to be named as trustee of someone’s trust. It seems pretty simple when you think about it but making sure all of the requirements of a trustee are met and in the end all the beneficiaries of the trust are satisfied can be harder than it seems. Certainly you have heard the phrase “no good deed goes unpunished”. That is almost always true when it comes to acting as a trustee. When money is involved and added to the stress and grieving of losing a loved one, even a trustee with the best of intentions can run into problems.

Certainly many trusts are created with a child named trustee, and those trusts are administered without any issues. Let’s face it, it is almost always easier and less expensive to name your best and brightest as trustee. But it can also cost more than you ever imagined. If the child you named as trustee does not move quick enough or is not transparent enough, often time the other family members get frustrated, speak with their own attorney, and end up in a lawsuit against the trustee. If your children don’t get along that great to begin with, or you are part of a blended family of children from different relationships the odds of a lawsuit increase dramatically.

A simple way to avoid this issue is to name a disinterested person or professional fiduciary as the trustee of your trust. Of course this can be stressful as well because picking the right person will certainly be more difficult and time consuming than naming your oldest child. There will also likely be a greater cost to hiring a disinterested trustee. That said, the saving of the family relationship and expense of litigation is much more cost effective in the end.

Professional fiduciaries can be found in many ways. To learn more and start the process, you might consider going to the Professional Fiduciary Association of California’s website to learn more and search a directory of professional fiduciaries. Meet with more than one and make sure it is a good fit not only with you, but with your children. If you feel comfortable, it may also be a good idea to have your children meet with the professional fiduciary as well as they will be the ones working together when you are gone.

If you do name a child as the trustee, speak to your children about your decision, why you made the decision you did, and encourage all of them to work together. Also encourage the child you named as trustee to seek the advice of an estate planning or probate attorney to help them administer the trust. This will ensure that the trust is administered properly and that the trustee is protected from potential estate litigation. Trust administration is far less expensive that estate litigation which can easily cost $30,000-$50,000 or more depending on the situation.

Speak with your estate planning attorney about your options. Discuss carefully your children, how they interact with each other, and be honest about potential problems that may arise after you are gone. A good estate plan with specific thought to who will act as your trustee and why, is important to a successful trust administration and increases the chances of avoiding estate litigation and the fracture of relationships.



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