Why It Is A Good Idea To Choose A Non Family Trustee

When setting up a trust for a loved one people often instinctively want to select a family member to serve as trustee.  There are three reasons why appointing a family member as a trustee is a mistake:

1. The role of trustee requires a time commitment.  The responsibility of being a trustee involves major fiduciary responsibilities that will require an extensive time commitment.  Trustees have a whole host of responsibilities that a person might want to avoid placing on the shoulders of a family member.
2. Trustees can be held personally liable for breaching fiduciary responsibilities.  A grantor setting up a trust might want to think twice about appointing a family member into a position that could open them up to personal liability. 
3. Appointing a family member as trustee could increase the risk of family conflict.  Beneficiaries and Trustee’s often have major disagreements over the way a trust might be managed.  If a grantor appoints a family member to serve as trustee then a potential dispute involving that trust would become a family dispute. 

See David H. Lenok, Three Reasons to Choose a Non-Family Trustee, Wealth Management, June 9, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.