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Should a trustee be good with money?

July 26, 2019

When creating your trust in California, selecting a trustee is one of the most critical decisions to make. Naturally, choosing someone for the job can be a headache, since administering a trust involves making financial decisions, and you might wonder if only someone with advanced financial knowledge can handle being a trustee. While a trustee should be competent in financial matters, it does not require being a monetary expert.

Forbes explains that the foundation of choosing a good trustee rests with the word trust. To select someone to administer your trust, you must choose someone you can trust to pass on the trust assets to beneficiaries. If you have a family member who has some ethical problems, not necessarily a criminal past, but someone you would not entrust with an amount of money for any period of time, you would be better off looking elsewhere.

People should look for a trustee that is good with money, meaning someone with sensible judgment, such as knowing when not to spend money. An overspender may be tempted to misuse the assets contained in the trust. The trustee should also be someone who can manage and save money. You might be wary of choosing someone who makes risky investments, like day trading. You do not want someone who is comfortable gambling on investments that can turn into big losses.

This does not mean you need to pick someone with an advanced business or financial degree. Typically, good trustees only need to understand the basics about investing. Ideally, a trustee should have some experience with investing personal assets. A trustee also should know when to consult a financial expert for help. It is a good sign if a trustee candidate has a current professional relationship with an investment advisor.

Financial competence is just one way to select a trustee, but it is very important for making sure that your assets reach your heirs. Because trust and estate issues will vary by individual, do not consider this article as actionable legal advice. It is only intended for educational benefit.