Maryland Estate Planning: Selecting a Trustee

Let’s start with the kinds of Trusts available to you.

There are two general categories:
• Testamentary Trusts, which are created under a Will
• Non-Testamentary Trusts—Revocable (inter vivos) and Irrevocable Trusts—which are created outside of a Will

The Testamentary Trust

In the Testamentary Trust category, the Trustee you select begins to serve either during or after the administration of your probate estate.

The Trustee is responsible for investing and reinvesting the Trust assets, dispersing assets to beneficiaries named in the Trust and, ultimately, terminating the Trust by making final assets transfers to the beneficiaries.

Non-Testamentary Trust

In this category, the Trustee begins to serve when assets are transferred into the Trust. The person establishing the Trust – the Settlor or Grantor – often names him or herself to serve as the initial Trustee.

The Settlor should name successor Trustees who will assume Trustee responsibilities when the Settlor is incapable or unwilling to do so. The Trustee of a Revocable Trust has the same fiduciary duties as the Trustee serving under a Testamentary Trust.

Selecting a Trustee

This is a distinctly different process than selecting a Personal Representative. While a Personal Representative will serve for a limited amount of time – to see the estate through probate – a Trustee may serve for many years.

Depending on the size of the estate and complexity of investments and property, you may need to assign a Trustee who has the capacity to handle the increasing demands of the position. That said, a Trustee is permitted – and should be encouraged – to seek professional assistance on matters that are beyond his or her individual capacity.

A family member may serve and could, for example, solicit advice from financial experts, accountants and attorneys, as needed. Another option is to appoint a Corporation to serve as Trustee; however, this will come at an expense to the Trust. Above all else, your Trustee should be a resourceful person who has a high degree of integrity.

If you are considering appointing a spouse or beneficiary as Trustee, there are potential pitfalls that should be discussed with an experienced estate planner. It may be necessary to appoint an independent Co-Trustee and limit the beneficiary’s rights by clearly defined standards.

For a free, confidential conversation about the benefits of a Trust, and estate planning, contact Maryland Estate Planning attorney Stephen J. Reichert at 410-299-4959, sreichert@reichertlegal.com or here.