Choosing a trustee key decision for family survival

The script is not the play; the play is actors giving life to the script. The printed notes are not the music; music is musicians making the sound from the notes.

With personal financial arrangements, the trust is not the protection for your family; the protection is the trustee acting skillfully to fulfill the trust's provisions.

A trust can be the means to protect a family against the unexpected. At any time, a person can become disabled or otherwise unable to manage his or her assets.

Unless someone very competent is available to step in for you perhaps for a prolonged period the family's financial affairs could suffer.

Good planning can't assume that a family would get through with the aid of relatives and friends. However well-intentioned, they have other cares and responsibilities that could conflict with the family's needs. Informal arrangements cannot substitute for a definite legal plan to provide proven investment skills and experience in caring for substantial assets.

That is the reason for setting up a trust.

A trust can serve as the framework to protect your family. You decide what assets to include in the trust. You decide who the trust will benefit and what the benefit will be.

But a trust is itself only a legal agreement made to transfer property to a trustee. The person or institution who is the trustee has the responsibility for overseeing the property as defined in the trust agreement. So, the skills and competence of the trustee are what determine how well your trust will protect your family. And the choice of trustee is critical when setting up a trust.

A trustee's duties

As a fiduciary, a trustee is obligated by law to follow a strict standard of care for a trust. Yet almost any adult can be a trustee. The law does not require any skills.

Making sure a trustee can do the job that's needed is up to you when you name the trustee.

The trust agreement will define the trustee's specific duties. These will generally require investment expertise, tax experience, business knowledge, plus administrative and reporting capabilities. No one calls a plumber to fix a VCR.

Plainly, it's better to choose an experienced trustee who knows how to effectively do the things that required. Usually, that means the trustee will:

Invest the trust assets

Distribute income and/or principal to beneficiaries

Make trust tax decisions

Maintain transaction records

Prepare account statements and tax reports for your beneficiaries

File the trust's income tax returns

(Troy Kennedy is senior vice president and chief marketing officer for Springfield Trust Company.)