When you create a trust, you'll need to decide who will be trustee when or if you cannot do the job yourself. Trustees have a great deal of authority over the money and property in a trust, so you should choose someone in whom you have great confidence. In the event the trustee proves unable to handle the responsibilities, you or the trust beneficiaries have will be able to remove the trustee and seek to recover any damages he or she caused.
Appointing Joint and Alternative Trustees
Appointing just one person as trustee can be risky. If the named trustee becomes unable to manage the trust because of a medical issue, lack of time, or any other reason, a new trustee will have to be appointed by a court.
One option is to name more than one trustee to serve at the same time. Appointing "cotrustees" or "joint trustees" can increase the likelihood that someone you've chosen will be available to do the job. However, you'll need to decide whether the trustees must act together or whether any trustee can act alone -- and both of these scenarios have complications. In fact, naming more than one trustee can sometimes create more problems than it solves.
A better option is to name successor or alternate trustees to serve if the original trusteed becomes unavailable.
Trustees Should Be Comfortable With Numbers
Trustees have a large number of responsibilities, many of which require some general accounting skills. Depending on the amount and type of assets you put into the trust, your trustee may need to correspond with financial institutions, keep track of all income and losses from investments, prepare periodic financial reports for beneficiaries, file tax returns, and distribute money to beneficiaries.
If you don’t know any one personally who could do a good job, you can name a lawyer or a professional organization to serve as trustee. However, professional trustees are usually paid (well) out of trust funds, and many trust makers prefer their trustees to have a more personal relationship with trust beneficiaries.
Trustees Must Manage the Trust for the Benefit of Beneficiaries
State laws require a trustee to administer a trust in the best interests of the beneficiaries. Trustees who fail to exercise beneficiary loyalty in every decision they make can be subject to adverse legal consequences. For example, a trustee who stands to gain more from a trust transaction than the beneficiaries do is in breach of the duty of loyalty - and can be financially liable.
Beneficiaries Can Have a Trustee Removed
Trust beneficiaries can always ask a state court judge to remove a trustee if they feel that the trust isn't being handled properly. A trustee can be removed for many reasons, such as lacking the skill to handle trust transactions, failing to file tax returns or pay taxes that cost the trust money in penalties, or serving the interests of others who aren't trust beneficiaries.