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Your Bank > Education and Advice > CNB University

Evaluating Potential Trustees

Lynn Carleton
Lynn M. Carleton, CTFA, CSNP is Vice President - Trust Administration Officer and can be reached at LCarleton@CNBank.com or (585) 419-0670 x50683.

The trustee you choose when establishing a trust is likely to serve your beneficiaries for a generation or longer and control a substantial amount of your money. You should be aware of what a trustee’s responsibilities are and be sure the trustee has the capabilities to perform well for your beneficiaries before naming a trustee.

The trustee is the institution or individual you name in your trust agreement to follow the trust’s terms and carry out its objectives. Almost anyone, professional or non-professional, can serve as a trustee. But a trustee is legally held to a very high standard. So, a trustee is very often a “corporate fiduciary” -- a professional organization such as ours.

Integrity

Honesty and loyalty should be a trustee’s primary attributes. A trustee is responsible for exercising a high degree of care over the trust property and for acting consistently in the best interest of the trust's beneficiaries. That always makes integrity a primary consideration.

Capability for Investment and Management Decisions

Your trustee needs knowledge and maturity to make investment decisions for the trust over an extended time period. The strategies your trustee implements could affect how much income your beneficiaries will receive. The trustee also may have to work with your family’s other advisors. All this requires decision making characterized by sound judgment and discretion.

Successful Track Record

Your trustee must have the skills to invest the trust’s assets successfully. While investment performance is never guaranteed, a record of achievement and investment experience can demonstrate a trustee’s investment skills.

Ability To Prevent Accounting and Tax Planning Problems

Administering a trust calls for knowledge of complex tax, legal, and accounting requirements. Even when professional advisors are engaged to assist, your trustee will still need to make the decisions for the trust. And you need confidence the trustee will be able to anticipate and avoid the many potential problems.

Recordkeeping and Reporting Capability

For many years, your trustee will make accountings as required to your beneficiaries and the taxing authorities. Your trustee must be capable of maintaining accurate records and reliably reporting to all the trust’s interested parties.

Stability and Continued Availability

You can expect a corporate fiduciary to serve for the entire trust term. But an individual trustee, including an attorney or accountant, may retire, die, or move. Naming successor trustees is possible, but a corporate fiduciary offers much more assurance your beneficiaries’ needs will be met without interruption.

Ability To Keep Assets Secure

A corporate fiduciary operates within a careful system of checks and balances, plus internal and external audits -- all designed to ensure the security of trust assets. An individual trustee does not offer this protection.

Impartiality

A family member who acts as your trustee may have to make decisions that cause family disputes. And remarriage or other events may compromise the impartiality of an individual’s decisions. Conflicts of interest do not arise for a corporate fiduciary. Impartial and objective decisions are assured.

Sensitivity to Beneficiaries

Meeting your beneficiaries’ needs will be a primary duty of your trustee. You should, therefore, consider a fiduciary organization’s reputation for responsiveness and service. Because a family member, working with an experienced corporate fiduciary, can play a valuable role by bringing an additional perspective to the management of your trust, you may want to name a family member as co-trustee.

Want To Know More?

The full explanation of how a trustee cares for a trust’s assets and the interests of its beneficiaries is much longer than can be covered here. Please contact us to learn more about choosing a trustee. 

WSG Team