Cast the Right Trustee to Conduct Your Trust

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Once you've decided to create a trust, you will need to make another important choice: selecting a trustee who will administer your personal trust according to your wishes. Just as musicians bring musical notes to life and actors give life to movie scripts, a trustee brings your trust to life. Without a trustee to execute it, your trust is simply a legal document.

Making a trustworthy decision

While it may be comforting to name a favorite relative or close friend as your trustee, it's important to carefully consider these choices. Further, while your loved ones may agree to serve as trustees as a favor to you, they may not understand what's really involved in this serious, extensive role.

Your trustee is directly responsible for safeguarding your trust assets and protecting your beneficiaries' interests in the trust. A trustee is considered a fiduciary with a legal and an ethical obligation to act responsibly and in good faith. As a fiduciary, your trustee is obligated by law to follow a strict standard of care for your trust and perform wide-ranging duties to satisfy the terms of the trust and minimize risks.

A trustee's complex roles and responsibilities include serving as an expert on the trust's legal provisions, understanding the laws that apply, administering the trust, investing trust assets, maintaining detailed records and preparing trust tax returns. This is a time-consuming commitment with many accountabilities and tasks.

There are few restrictions regarding who may serve as a trustee. You can name almost any one who has reached adult age and is not legally excluded from serving as your trustee. It's up to you to make sure the trustee you choose can do the job that's needed.

Consider your options

When choosing a trustee, keep the purpose of the trust and your personal preferences in mind. Your typically have three choices: individual trustees, corporate trustees or co-trustees.

You can select family members, friends or professionals like attorneys or accountants to serve as individual trustees. In some cases, you also can appoint yourself as trustee of your trust; this is called serving as a "self-trustee." On the plus side, individual trustees offer familiarity with your family situations. On the flip side, individuals may lack the expertise needed to deal with complex trust duties, may not have the time needed to carry out their duties and may have difficulty dealing with personal conflicts among beneficiaries.

A second option is selecting a corporate trustee to administer your trust. With this choice, you are assured of professional expertise and the objective handling of personal conflicts and beneficiary interests. While a corporate trustee can provide service to many generations of your family, they may not be as familiar with your family situation and may not provide the personal perspective you seek.

The third option is naming co-trustee, selecting two or more trustees to serve together. You might choose several individual trustees or name a combination of individual and corporate trustees. With several individual trustees, they share the responsibilities and time commitments but also must coordinate their efforts and cooperate with each other to fulfill their fiduciary duties. When you name both individual and corporate trustees, you combine the continuity, expertise, and objectivity of a corporate trustees with the personal perspective of an individual.

Whom can you trust?

Whether your trust is simple or complex, large or small, you will need to choose a trustee who will protect your assets, care for your beneficiaries, honor your wishes and faithfully execute the provision of your trust. Just as an orchestra leader carefully selects the musicians to bring works of music to life, selecting the right trustee will set the stage for the ongoing success of your estate plan.

The Trust Triangle

Trusts are legal entities that involve three parities:

• The grantor sets up the trust
• The trustee administers the trust - including managing any assets the grantor puts in the trust
• The beneficiary receives income and/or principal from the trust

Factors to Consider in Selecting a Trustee

• How long will the trust likely last?
• How complex is the trust? Will the trust administration require special expertise?
• What type of assets will fund the trust?
• How large will the trust be?
• Given family dynamics, will the trust be easy or hard to administer?
• To what extent is personal/family control desired?
• How much time and expertise will be required of the trustee?

 © 2006 Ameriprise Financial, Inc.

All rights reserved.

Neither Ameriprise Personal Trust Services nor Ameriprise financial advisors are authorized to give legal or tax advice that goes beyond the scope of its fiduciary responsibilities associated with serving as investment agent or trustee. For legal or tax matters that go beyond these roles, clients will need to consult their own legal and/or tax advisors.

Financial advisory services and investments available through Ameriprise Financial Services, Inc., Member NASD and SIPC. Securities and mutual funds available through Ameriprise Financial Services, Inc. are not deposits or obligations of, nor guaranteed or insured by neither the FDIC nor any other federal or state agency and may involve investment risk, including loss of principal. Ameriprise Financial Services, Inc. is part of Ameriprise Financial, Inc.

Ameriprise Bank, FSB, is separate from Ameriprise Financial Services, Inc. and is not a broker-dealer. Ameriprise Financial Services, Inc. and Ameriprise Bank FSB are subsidiaries of Ameriprise Financial, Inc.

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