Choosing a trustee is one of the most important decisions when establishing a trust in Minnesota. The trustee you select will manage the trust assets, distribute funds to beneficiaries, file taxes, and more. With so much riding on this role, choosing a trustee who is qualified, responsible, and aligned with your trust goals is crucial.

This guide will walk you through the key factors to consider when selecting a trustee for your Minnesota living trust or other trust.

What are the Trustee’s Responsibilities?

Before exploring your options, it helps to understand what exactly a trustee does. A trustee’s primary role is to manage the assets of the trust according to the trust terms. This involves duties such as:

A trustee chosen for your Minnesota trust must:

• Administer the trust following its terms. The trustee cannot change or ignore provisions within the trust document.
• Act in the best interests of the beneficiaries. The trustee has a fiduciary duty to administer the trust fairly for all beneficiaries.
• Manage the trust assets prudently. The trustee must invest assets wisely and profitably.
• Keep detailed records and provide accountings. Detailed records must track income, distributions, expenses, and more.
• File required tax returns. The trustee must handle all required state and federal tax filings for the trust fund.
• Make distributions to beneficiaries. The trustee must distribute income or assets to beneficiaries as outlined in the trust.
• Communicate with beneficiaries. The trustee should provide beneficiaries with information regarding the trust administration.
• Defend the trust against legal challenges. The trustee may need to defend the trust in case of lawsuits or other disputes.

Given these significant duties, the trustee you choose must have the time, skill, judgment, and integrity to serve the beneficiaries’ best interests when administering your Minnesota trust.

Trustee Options for Your Minnesota Trust

When establishing a revocable living trust or testamentary trust in Minnesota, you have several options for who can serve as trustee:

Individual Trustees

Naming a family member or trusted friend as a trustee is common for revocable living trusts. Candidates can include adult children, siblings, parents, or a close friend. The benefit is choosing someone you know well. The downside is they may lack the necessary expertise or impartiality.

Professional Trustees

Banks, trust companies, or professional fiduciaries have expertise in handling trusts. However, their services come at a cost through trustee fees. An estate planning attorney can help you find reputable professional trustees.

Co-Trustees

You can name a family member and a professional trustee to serve together as co-trustees. This blends the benefits of each – you get someone you trust plus a professional to handle the complexities.

Successor Trustees

It’s wise to name one or more successor trustees in case your first choice cannot serve. This ensures there is always someone ready to administer your Minnesota trust.

Key Factors When Selecting a Trustee

Regardless of whether you choose a family member, professional, or both, some key considerations apply when picking a trustee for your Minnesota trust:

Judgment and Impartiality

The trustee must use good judgment when making trust administration and distribution decisions. They also need to remain impartial when multiple beneficiaries are involved.

Availability and Willingness to Serve

Be sure the trustee you name has time to carry out trustee duties. Also, confirm they are willing to serve – do not name someone without discussing it first.

Expertise Handling Finances

The trustee should have strong financial management skills, including properly investing, budgeting, and staying organized.

Trustworthiness and Integrity

The trustee will have access to the trust assets, so they must have high ethical standards and honor your wishes.

Organized with Attention to Detail

Managing a trust involves extensive record-keeping and paperwork. Being organized and detail-oriented are essential trustee qualities.

Understanding of Fiduciary Duties

The trustee must grasp the legal fiduciary duties they owe the beneficiaries. If not, poor decisions could open them up to lawsuits.

Longevity and Good Health

Ideally, choose a younger trustee who will manage the trust for many years to come. Also, consider their current health and family medical history.

Choosing a Family Member or Friend as a Trustee

Naming a family member or close friend as your revocable living trust’s trustee is common. It allows you to choose someone you know well and trust.

However, there are downsides to naming a family that you should consider:

• Lack of expertise – They may not have experience handling finances at the trust level.
• Reluctance to serve – They may not want the significant responsibility involved.
• Conflicts of interest – There could be disagreements about distributions or investments.
• Power struggles – Family dynamics and discord could interfere with the administration.

To reduce issues, have an open conversation with the family member before naming them as trustees. Explain the significant duties involved. If they accept the role, get their commitment to act impartially and check in regularly regarding the administration.

Also, consider naming co-trustees or successor trustees in case any issues arise down the road. Your estate planning attorney can help put appropriate provisions in place.

When to Choose a Professional Trustee

Here are some situations when naming a professional trustee from a bank, trust company, or fiduciary services firm makes sense:

• The trust is very large or complex. Professionals are equipped to handle this.
• You want robust investment management expertise. A professional trustee has institutional investment resources.
• Impartiality is needed because beneficiaries don’t get along. A third-party professional prevents conflicts.
• There is not a good family member or friend option available or willing to serve. Relying on an outside trustee ensures your trust is still managed properly.
• The beneficiary is a minor. Professionals can manage distributions until adulthood.
• The beneficiary has disabilities. A corporate trustee can coordinate with government benefits and oversee any special needs
• You expect the trust to be involved in litigation or disputes. A professional trustee has the resources to address legal issues.

A downside of corporate trustees is they charge trustee fees based on the trust assets. Fees often range from 0.50% to 1% annually. Your attorney or financial advisor can help you evaluate reputable professional trustee options for your needs and budget.

Using Co-Trustees

Naming co-trustees allows you to blend the benefits of choosing a family member or friend and a professional trustee.

Here is how co-trustees work:

• You select one family member/friend and one professional trustee to manage the trust together.
• The family member or friend trustee provides insight, familiarity, and accountability.
• The professional co-trustee handles the complexities the family member may not have expertise in.
• The co-trustees must work cooperatively in their agreed-upon duties and make joint decisions.
• The trust document outlines which co-trustee is responsible for what administration duties.

Co-trusteeship allows you to get the impartiality and skills of a professional trustee combined with the personal touch of a family member or friend. It also provides checks and balances since no single person has total control over the trust.

When crafting your Minnesota trust with co-trustees, your estate planning attorney will outline an appropriate structure and coordination process.

Naming a Successor Trustee

It’s wise to name one or more successor trustees in your Minnesota trust document. Successor trustees step in if your initial trustee choice cannot serve because of:

• Death
• Resignation
• Inability or unwillingness to serve
• Removal for cause

Without a named successor, a court would have to appoint a trustee if yours is no longer able to serve. By naming your own, you ensure the transition of power goes according to your wishes.

When possible, name at least two successor trustee options in case your first choice cannot do it either. Talk to those individuals before listing them in your trust to confirm they would be willing if the need arises.

Review your choice of successor trustees periodically and make updates as necessary. For example, if your named successor trustee becomes elderly, you may want to designate a younger second successor instead.

Modifying the Trustee

If you ever need to modify your selected trustee for a Minnesota trust, your options include:

Removing a Trustee

As a trust creator, you can remove a trustee you initially named. Once you pass, the beneficiaries can collectively petition to remove a trustee who violates or ignores fiduciary duties.

Resignation

A trustee can choose to resign, opening up the successor trustee to take over.

Appointing a Trust Protector

Some trusts give a trust protector the power to remove and replace trustees. You could name this third party to oversee the trustee’s compliance.

Be sure to document all trustee appointments and modifications properly through your attorney.

Turn to a Minnesota Trust Lawyer for All Your Estate Planning Needs

Estate planning attorneys, like those at Safe Harbor Estate Law, help Minnesota families select the ideal trustees for their living trusts and estates. Whether you need guidance naming a loved one, hiring a professional, or structuring trustee oversight, they can advise you every step of the way. Contact their team online at https://safeharborestatelaw.com/ to start securing your legacy with a carefully crafted Minnesota trust and estate plan.