Choosing Your Trustee

One of the most important decisions you will make in finalizing your estate plan is determining who will serve as your successor trustee. Most attorneys, whether they are in private practice or otherwise, recommend the use of a professional or institutional trustee, usually a bank.

You may believe naming a family member or friend to serve as successor trustee is an advantage. But, service as a trustee is hard and demanding work. There are many reasons why using a family member or friend as successor trustee should be discouraged.

The following are some of those reasons:

Family and Friends Generally Lack the Necessary Training, Education, Expertise or Experience. [Details]
Few people have the necessary training, education or expertise to serve as a trustee. Remember, serving as a trustee often entails transferring title to real estate, buying and selling securities, running or supervising a business, keeping detailed financial records, tax preparation, and the like. These activities generally require the services of lawyers, accountants and financial consultants. The SMB Trust Department has these professionals on our staff.

Family and Friends Often Encounter Problems, Conflicts of Interest and Lack Objectivity. [Details]
Family and friends do not always mix well with business. Many matters require unbiased interpretations of needs, or objective decision-making as to investments. A family-member-trustee may consciously or unconsciously favor certain family members, not to mention the stress on the family and loved ones. Or a family-member-trustee may be incapable of managing his/her own money, let alone trust funds under his/her discretion and control, and may misapply the funds.

Family and Friends Are Not Always Available. [Details]
If your trustee is absent from the area other problems may arise. A trustee living out of the area will have a great deal of trouble supervising or selling an on-going business in Missouri or providing timely, day to day, hands on, attention to a person, business or trust investments. It is not unusual to work on a trust estate every day, perhaps for several hours each day. An absent trustee focused on his/her own business and family may not be able to devote the necessary time on a daily basis.

Lack of Supervision. [Details]
Professional trustees are closely monitored by the federal and state governments. In addition, trust accounts are audited on a quarterly basis. Professional trustees are also subject to the United States and Missouri statutes and laws. Non-professional trustees have no such supervision.

The "Prudent Investor" and Bonding. [Details]
Family members and friends are seldom insured or bonded against loss. Professional trustees, on the other hand, are bonded and legally bound to invest trust funds as "prudent investors." You have devised a plan to pass certain things to certain people. Be sure your plan is followed.

Successor Trustee Predeceases. [Details]
While a son, daughter or close friend may unfortunately predecease you, and therefore not be available to serve as your trustee, financial institutions will survive and be there when you need them.

The Southwest Missouri Bank Trust Department has the professionals available to provide the necessary guidance, knowledge and control of trust accounts. We have an attorney, accountants, a portfolio analyst, and investment counselors available and ready to perform the necessary services. The Trust Department provides these services on a full-time basis and stands ready to serve as your professional trustee.