A well thought out estate plan typically includes numerous legal documents as well as a wide variety of legal strategies, all aimed at accomplishing goals that complement your primary goal of creating a roadmap for the division of your estate property upon your death. One common addition to an estate plan is a trust. In fact, many estate plans include more than one trust because of the flexibility trusts offer and the numerous purposes a trust can serve within an estate plan. One decision that must be made when you create a trust is who will serve as the trustee of your trust. We are often asked if we (one of our attorneys) can serve as the trustee of a client’s trust. The simple answer to that question is that an attorney can serve as trustee of a trust. Whether or not appointing your attorney as the trustee is the best choice or not depends on a number of factors.
Trusts have evolved over the past century to the point where there is a specialized trust for almost every need or goal. If a specialized trust doesn’t already exist, one can usually be created. Regardless of the type of trust you choose to create, your trust will need a trustee. The trustee administers the trust, manages the trust assets, and communicates with trust beneficiaries. Your trustee is in a fiduciary relationship because the trustee is managing assets for someone else. This alone means you should pick your trustee carefully.
Appointing your attorney as the trustee of your trust has both advantages and disadvantages. If the attorney drafted the trust documents he or she will obviously be intimately familiar with the trust terms and purpose. Your attorney may also have “behind the scenes” information about your intent and wishes for the trust and the trust beneficiaries. If you anticipate problems in the form of a court challenge, having your attorney serve as trustee may help because your attorney will know what to expect and be prepared for the challenge.
On the other hand, appointing your attorney as the trustee can potentially create a conflict of interest. Most trust documents, for example, include language that limits liability or exculpates the trustee entirely. If you attorney drafted the document that means your attorney is limiting his or her own liability – something that can create ethical issues. These potential issues, however, may be able to be addressed through the use of an independent legal consultation and a consent/waiver.
Deciding who to appoint as trustee should never be taken lightly, even if your potential trustee is your attorney. Be sure to discuss all the pros and cons of appointing your attorney with your attorney and with an objective, uninvolved attorney to ensure you understand your options before making a decision.