A question we are often asked is “Why do I need a corporate successor trustee? Can’t I just name a family member?” As is often the case, the answer is that it depends. Conceivably, a family member could work, and this happens without issue all the time. It really comes down to what is most important to you. Some considerations:
- How important is it for you to make things as easy as possible on the family who is dealing with a loved one’s loss of capacity or who has just lost a loved one? If that is a high priority, leaving one or more family members with a substantial job to do may not be preferred. This is especially true the closer the family member is, but the closest family members are precisely the ones you are likely to name.
- Is there family who is a) local, b) willing to serve, c) able to serve and d) conscientious enough to do what needs to be done in a timely, organized and documented fashion?
- Are the family dynamics supportive of selecting one or two family members to be in charge after a death or during a disability (i.e., is naming some person likely to cause any friction in the family)?
- Is the family member likely to charge less in fees than a professional? Even if the individual takes a fee that is smaller than a that of a professional, if that person is not the sole beneficiary, might this cause any family friction?
- If not, does that family member realize that serving really is a job — not just an honorific bestowed upon them by the now recently deceased — with corresponding responsibilities, obligations, deadlines, requirements, liabilities, etc.?
- Will the family member be emotionally stable enough to both grieve for his or her loss and simultaneously administer the trust in an organized, businesslike manner?
If there are family members who meet the above criteria — which are not requirements, but merely issues to consider when thinking about naming family — then naming that person as trustee should be fine. In reality, many people do not think through all these issues when naming a family member.
Even after choosing a family member trustee and some number of alternates in light of the preceding considerations, it is nevertheless a wise practice to name a professional fiduciary, such as First Covenant Trust, as the last alternate. That way if a family member decides they do not wish to act, they can simply decline to serve, leaving Covenant to step in. Please contact your advisor if you are interested in learning more.
Roger A. James, Jr., JD, CTFA
Partner, Director of Trust Services
