Selecting the trustee or executor to manage your wishes to distribute your hard-earned farm assets is a very important task. Who you choose can make a difference in how well your plans are followed and can impact your legacy for future generations. Following some simple guidelines can help reduce anxiety.
No matter how much time, energy, and resources are used to create your trust document, it is impossible to create a perfect one that accounts for every potential development or situation. That's why the trustee should be someone you know very well and you find trustworthy and honest.
Sometimes an adult child of the trustor is named trustee without careful thought. They may be the oldest child or only child. They may live close to the property or parent. They may be the most dominating (or the most caring) child, the child who is best with money, or the favored child. Serving as trustee can be time-consuming and frustrating, even if there are no problems arising from the settlement of the estate. Administering an estate is serious business.
Consider these positive aspects when selecting a trustee:
If the trustee is believed to be showing favoritism, relationships can forever be damaged. This can lead to lawsuits. Some trustors place “no-contest” provisions in the documents to punish those who don’t agree with the distribution of assets/benefits, and this also can cause deep divisions. Sometimes family members perceive these provisions as a “right to steal” or to “take advantage” of the situation. This may be reality or perceived reality, but the impact can be very harmful.
Some trustors choose only one trustee and, other times, two or more. There are pros and cons to each option. The number you choose may depend on the ability and personalities of the trustees selected. When more than one trustee is selected, they will have to agree on every decision, but they can also provide checks and balances for each other. They may also be able to share the workload and complement each other’s skill sets. A carefully chosen single trustee can often manage the job alone. A successor trustee (a backup) should also be carefully chosen if the trustee can no longer fulfill his/her duties.
If you do not have someone in the family that you feel is right for the job, consider a corporate trustee, which is often a bank trust department. If you go this route, you will want to analyze the person who will be the designated manager of the trust. Fees will likely be higher than if you use a family member or trusted individual. A benefit of a corporate trustee is that if your heirs become frustrated in the process, they will most likely take their frustration out on the corporate trustee and not each other.
Managing trusts and dispersing assets is no easy task. Take the time to select the best person for the job. Your heirs will love you for it.
The following is meant only for educational purposes and not to be construed as legal advice. Consult your legal advisor for actual legal advice.
