Regardless of what kind of trust(s) you establish as part of your estate planning, naming the right trustee is crucial to the trust being managed in the way you intend it to. Trustees require different types of skills, depending on the purpose of the trust.
Maybe you’re establishing a conditional trust for an adult child to ensure that they get their inheritance, but only in limited amounts and for purposes like pursuing their education, starting a business or buying a home. Maybe you want the money in a trust to grow significantly through sound investments so it will provide a continuing source of income for a spouse. These are just two examples.
What’s required of a trustee?
Regardless of the trust’s purpose, the trustee has a fiduciary duty (a legal and ethical responsibility) to act in the best interests of the beneficiary(ies) and to abide by the instructions provided by the person who created the trust (the settlor) as long as they’re legal.
It’s important to make sure that any trustee you choose has the necessary temperament, time, skills and willingness to take on this responsibility. That doesn’t necessarily mean that the beneficiary will be happy about the choice.
This happens sometimes when an older sibling or stepparent is named a trustee for an adult child’s trust. Further, when co-trustees are named, they don’t always work well together. These are things to consider if you want to minimize conflict after you’re gone. However, it’s important to know that a beneficiary, co-trustee or even a court can’t remove a trustee without good reason. Essentially, removal must be in the best interests of the beneficiary(ies).
What does Oregon law say?
Following are some examples of when a trustee can legally be removed under Oregon law:
- When there’s been a “serious breach of trust” by the trustee
- If a trustee is found to be “unfit or unwilling,” or has persistently failed to administer the trust effectively”
- If the co-trustees inability to work together “substantially impairs the administration of the trust”
- If there’s been a “substantial change of circumstances” that warrants a change in trustees
Basically, a trustee can be removed by a court if it’s determined that doing so is in the beneficiary(ies)’ best interests.
The information may allay your fears that your choice of one or more trustees won’t be honored or upheld after you’re gone, even if they’re doing a good job. By having sound estate planning guidance, you can make the best choices for your estate and your family.