How To Choose A Trustee
Dale Tamburro • July 21, 2025
When I give Seminars on Trusts, they are long, detailed and I think very helpful to people who want to learn about Trusts. But I almost never cover enough information on your different choices for Trustees and the responsibilities of the Trustee. Like any estate documents they are only as good as the fiduciaries named in them. For a trust the fiduciary is called a Trustee.
Trust Administration Basics
A trust is established through the creation of a trust agreement. Within the trust agreement, the Donor or Grantor (creator) of the trust must appoint a Trustee. A Trustee can be any qualified adult, including a friend, family member, or professional (such as an attorney). The Donor can also appoint more than one Trustee, making them Co-Trustees or appoint an entity, such as a bank, to be the Trustee. The Trustee’s overall job is to guard the trust assets and oversee the administration of the trust. Administration the trust, however, involves numerous duties and responsibilities, including:
- The Donor or Grantor of the trust creates the trust terms, and those terms dictate how the trust should be administered. The Trustee needs to have a clear understanding of those terms and is legally required to follow them without deviation unless a term is illegal, impossible, or unconscionable. The Trustee is required to understand the trust purpose, as outlined in the trust agreement, and to make decisions with that in mind. A Trustee cannot allow his/her personal opinion to get in the way while administering a trust.
- One of the most important aspects of a Trustee’s job is protecting the trust assets. The Trustee is also responsible for investing the trust assets to help the principal grow. Unless the Donor specifically directs the Trustee to make riskier investments, all investments should be low risk and protecting the trust principal should take precedence over growing the trust assets.
- The Trustee has a duty to keep trust beneficiaries apprised of trust business and to communicate with beneficiaries as necessary.
- The terms of the trust agreement will dictate how the distribution of trust assets should be handled. The Trustee, however, is responsible for making sure those terms are followed and that the beneficiary receives the distribution according to the terms of the trust agreement.
- The trust agreement may give the Trustee the authority to make discretionary distributions. If a beneficiary needs funds prior to a scheduled distribution, for example, the Trustee may have the authority to grant that request.
- A Trustee should keep detailed records of all trust business, including distributions, payment of trust bills, and time spent administering the trust because those records may be needed to defend the trust, justify trust expenses, or even prevent the Trustee from being held personally liable for mistakes made during the administration of the trust.
- Because a trust is a separate legal entity it may be subject to taxation. Whether the trust must file a tax return and/or pay taxes will depend on the type of trust, the value of trust assets, and other variables; however, the Trustee of the trust is responsible for determining if any taxes are due and who or what should be paying them. If the trust has an EIN then the Trustee must also file the appropriate tax returns and pay or redirect any taxes due.
- The Trustee must provide an accounting annually to all qualified beneficiaries.
Factors to Consider When You Choose Your Massachusetts Trustee
A Trustee is in a fiduciary position, meaning that the utmost care must be taken to protect the trust assets and that all decisions must be made with the best interests of the beneficiaries in mind. A Trustee is also required to juggle a considerable number of duties and responsibilities while administering the trust. All of this should be taken into consideration when appointing a Trustee to limit the likelihood of costly mistakes being made by the Trustee. Before appointing a friend or family member based solely on your relationship with that person, consider whether that person has the following essential characteristics:
- The Trustee you appoint will be responsible for managing and investing the trust assets. Ideally, your Trustee should have a background or education in finance. By the same token your Trustee must understand the trust terms and the state and federal laws that are applicable to the administration of the trust. That makes someone with a legal background an ideal candidate for the position.
- Your decision should not be based entirely on the fact that you trust someone; however, being trustworthy is certainly a necessary characteristic for a Trustee given that the Trustee will control the money and assets you use to fund the trust. The Trustee is also responsible for distributing those assets to beneficiaries and paying trust bills, including his/her own fee for acting as the Trustee.
- Your Trustee may not agree with the terms of the trust agreement, but that cannot interfere with his/her job as Trustee. A Trustee is legally required to administer the trust and make discretionary decisions with the stated trust purpose in mind and by using the trust terms created by the Donor without regard to the Trustee’s personal opinion.
- Consider whether your prospective Trustee will likely create a conflict. If he/she is a member of the family, for instance, will appointing that person as your Trustee create a conflict within the family? Are other family members beneficiaries of the trust, putting the Trustee in a potentially awkward position? What about business dealings that could create a conflict for the Trustee? Whenever possible, avoid appointing a Trustee who will likely create a conflict.
- People frequently make the mistake of assuming that someone is willing to serve as the Trustee of the trust they create. With that in mind, be sure to discuss the position with a prospective Trustee before appointing him/her to the position. Along with making sure that a prospective Trustee is willing to serve, take into consideration whether the person will realistically be available to fulfill the duties and responsibilities involved in administering the trust. Consider where the person lives or is likely to live in the future as well as his/her existing family obligations. Finally, consider the person’s age and health when deciding if they would make an ideal candidate for Trustee.
- There are many considerations to think about if you have co-trustees. Often co-trustees are a family member/friend and a professional like an attorney or accountant. There are many good reasons to use a professional trustee with or without a co-trustee. These considerations are different for everyone and should be discussed at the time of creating the trust.
7 Steps Before Meeting With an Estate Planning Attorney Takeaways You do not need to have every estate planning decision finalized before meeting with an attorney. A basic inventory of your assets can help you avoid overlooking important property or accounts. Identifying potential beneficiaries and an executor can make the conversation with your attorney more productive. Blended families, minor children, beneficiaries with disabilities, and other family circumstances may require special planning. Existing wills, trusts, and beneficiary designations should be reviewed together as part of your overall estate plan. Making a will is easier when you prepare before meeting with an estate planning attorney. You do not need to have every decision finalized, but gathering information about your assets, loved ones, and wishes can help your attorney understand your situation and identify issues that may need special attention. Your attorney can help evaluate your options and decide what type of estate plan is right for you. Here are seven steps to take before a meeting with an estate planning attorney. 1. Make a Basic List of Assets Your assets are everything you own, including: Your home or other real estate Bank and investment accounts Vehicles Valuable personal property, such as jewelry, artwork, collectibles, or family heirlooms Business interests Life insurance Making a list of everything you own can help you in several ways. First, it helps you take stock of your assets and avoid forgetting something you wish to include in your estate plan. Writing down your assets can also help you start to think about the people you may want to inherit your property. 2. Gather Important Documents If possible, gather copies of documents that may help your attorney understand your finances, family situation, and existing estate plan. You may want to bring: Any existing wills, trusts, or amendments Powers of attorney and health care documents Deeds or other records for real estate Recent bank, investment, and retirement account statements Life insurance policies Beneficiary designation forms Business ownership records Prenuptial or postnuptial agreements Divorce decrees or property settlement agreements Information about jointly owned property or accounts Documents relating to a beneficiary with a disability or special needs If you cannot find a document, make a note of the account or property, the institution that holds it, and its approximate value. This information may still help your attorney while you look for supporting records. Bring copies when possible and keep your original documents. Your attorney can tell you which documents are most important for your situation and whether anything else is needed. 3. Identify Your Beneficiaries Before your appointment, make a list of the people and organizations you may want to benefit from your estate plan. This could include: Your spouse or partner Children, stepchildren, grandchildren, or other family members Friends or other people who are important to you Charities, religious organizations, or other nonprofits For each person or organization, think about what you would like them to receive. You might want to leave someone a specific item, such as a piece of jewelry, a vehicle, or a family heirloom. You might also want to leave a specific dollar amount, a percentage of your estate, or the remainer of your property after other gifts have been distributed. Also consider backup plans. For example, who should inherit if a beneficiary dies before you? If you have minor children, should their inheritance be held in a trust until they reach a certain age? If a beneficiary receives government benefits or has difficulty managing money, should their inheritance be handled differently? You do not need to have all these decisions finalized before meeting with your attorney. Jotting down your initial thoughts can help your attorney explain your options and identify issues you may not have considered. 4. Think About Who Should Serve as Your Fiduciary Fiduciaries are the people you name in documents like health care proxies (proxy), power of attorneys (attorney-in-fact or agent), wills (personal representative or executor) and trusts (trustees). This individual should be someone you trust to act responsibly and ethically. You may also want to consider their ability to manage the administrative demands of the role. You also should have a backup in mind in case your first choice won’t or can’t act in the given role. 5. Note Family Circumstances That May Affect Your Plan Before meeting with an estate planning attorney, take note of any family circumstances that could affect your estate plan or how you want to distribute your assets. Important details may include: You have children from a previous relationship or a blended family You are unmarried or have a long-term partner You have minor children and need to consider who you would want to care for them if you and the other parent could no longer do so You have a child or other beneficiary with a disability A beneficiary receives needs-based government benefits You provide financial support for a parent, grandchild, or another dependent You want to leave different amounts or types of property to different family members You are considering leaving someone out of your will You have concerns about a beneficiary’s ability to manage money You own property with someone else or have a family business These circumstances do not necessarily mean that your estate plan will be complicated. However, they may affect whether a simple will is appropriate or whether you should consider additional planning, such as a trust. For example, a beneficiary with a disability who receives needs-based benefits may need an inheritance handled through a special needs trust rather than receiving it directly. 6. Gather Existing Beneficiary Designations Next, review your existing beneficiary designations. These may appear on retirement accounts, life insurance policies, and payable-on-death or transfer-on-death accounts, which often pass directly to the named beneficiaries and may not be controlled by your will. The rules can vary depending on the account and the way it is owned, so bring copies of your designations to your attorney. Through the estate planning process, some people find they want to change or revise their designations on accounts and policies. Others sometimes realize they still need to add a beneficiary. 7. Bring Questions for the Attorney Finally, think about any questions you may have for the attorney. You might want to ask about planning for pets, digital assets , best practices for document storage, or what other estate planning documents you may need. Thinking of questions in advance can help you make the most of your first appointment.
Takeaways Do not rush into selling, renting, or moving into an inherited house before confirming ownership and financial obligations. Your main options may include moving in, selling the property, renting it, or buying out other heirs. Inherited real estate generally receives a new tax basis tied to its value when the owner died, but the tax result depends on the property and the transaction. Disagreements among siblings, Medicaid concerns, trusts, mortgages, and out-of-state property may require advice from an attorney or tax professional. Inheriting a house can create both financial opportunities and difficult decisions. The property may be a valuable asset, a family home filled with memories, or an expensive responsibility that you do not want to manage. You may be wondering whether to move in, sell the property, rent it out, or share it with other heirs. Before choosing an option, confirm who owns the property, understand the costs, and consider the legal and tax consequences. Start With These Immediate Steps You do not have to decide the property’s long-term future immediately. But you should take steps to protect the house and understand the situation. Confirm Who Owns the Property Review the will, trust, deed, probate filings, and other estate documents. The person named in a will may not automatically have complete authority to sell or transfer the house while the estate is being administered. Ownership may also be affected by joint ownership, a transfer-on-death deed, an irrevocable or revocable turst or state-specific probate rules. Before signing a listing agreement or transferring the property, confirm that the correct person or people have authority to act. Protect and Maintain the House Make sure the property is secure and continues to have appropriate insurance coverage . Insurance agents must be notified of the death of the owner/occupant. If no one is occupying the property, the insurance cost will change. If the insurance agency is not notified you may be denied a later claim. Depending on the circumstances, you may also need to: maintain utilities pay property taxes address urgent repairs protect the house from weather or other damage If the property has a mortgage, home equity loan, or reverse mortgage, contact the loan servicer. Do not assume that you can simply ignore the loan or transfer it to an heir. The estate documents, loan terms, and applicable law may affect what happens next. Gather the Financial Information Collect documents showing: The current mortgage balance and monthly payment Property taxes and insurance costs Homeowners association fees Utility and maintenance expenses Liens or other claims against the property Recent appraisals or assessments Records of major improvements Rental income, if the property was previously rented This information can help you compare the cost of keeping the property with the likely proceeds from selling it. Should You Move Into the Inherited House? Moving into the house may make sense if it is in a location you want, meets your needs, and can be maintained within your budget. Before moving in, consider: Whether the house needs repairs or accessibility modifications The cost of property taxes, insurance, utilities, and maintenance Whether there is a mortgage or other debt Whether you can afford the house over the long term Whether other heirs also have ownership rights Whether moving would affect your work, health care, or family responsibilities If you inherit the property with siblings or other people, moving in does not necessarily give you the right to make all decisions about the house. Co-owners may need to agree about repairs, expenses, use of the property, and whether anyone should pay rent. Put agreements among co-owners in writing. A written agreement can address who may live in the home, which expenses each person will pay, how repairs will be approved, and what happens if someone later wants to sell. Should You Sell the Inherited Property? Selling may be the most practical option when multiple heirs want to divide the asset, the property is expensive to maintain, or no one wants to live nearby. Before listing the house, consider: Its current market value Needed repairs and preparation costs Real estate commissions and closing costs Existing mortgages, liens, and unpaid taxes The timing of the probate or trust administration Whether all owners must sign the sale documents The possible income tax consequences A sale can provide a clean separation among heirs. However, disagreements about the listing price, repairs, timing, or distribution of proceeds can delay the process. An appraisal may help establish a fair value before one heir buys out the others or the property is listed. Should You Rent the Inherited House? Renting the property may create income and allow the family to keep the home as an investment. It also creates ongoing responsibilities. Consider the cost of: Property management Repairs and routine maintenance Insurance and property taxes Vacancies and unpaid rent Tenant screening and legal compliance Accounting and income tax reporting Disagreements among co-owners If several people inherit the house, decide in advance who will manage it, how rental income will be divided, and how large expenses will be approved. A property that produces rental income can still be a poor investment if the owners cannot agree or the maintenance costs are too high. What If You Inherited the House With Siblings? When siblings inherit a house together, the property cannot be physically divided as easily as cash or investments. The heirs generally need to agree on one of several arrangements. Options for Handling a House Inherited With Siblings Option May Work Best When Main Issue One heir buys out the others One person wants to keep the home Agreeing on a fair value and payment terms Sell the property The heirs want to separate their interests Repairs, sale costs, timing, and division of proceeds Rent the property Everyone wants ongoing income Management, expenses, vacancies, and future disagreements Mediate the dispute The heirs disagree but want to avoid court Everyone must participate in good faith If the heirs cannot reach an agreement, a court proceeding may be available in some states to resolve co-ownership disputes. The rules and procedures vary, so consult an attorney in the state where the property is located before taking legal action. What Are the Tax Consequences? The tax consequences depend on a variety of factors, including: the property’s value how it is used when it is sold the applicable state law For federal income tax purposes, the basis of inherited property is generally its fair market value on the date the owner died. If you sell the property for more than your adjusted basis, you may have a taxable gain. If you sell it for less, you may have a loss, although the tax treatment can depend on how the property was used. The Internal Revenue Service (IRS) explains how basis applies to inherited property . The IRS also provides information for executors and administrators about selling or disposing of inherited property in Publication 559 . Keep documents showing the property’s value at the owner’s death. Also hold on to appraisal reports, improvements, selling expenses, and other costs. Ask a tax professional how to determine and document the basis before filing a return or completing a sale. When Should You Get Legal Advice? Consider consulting an attorney before making a major decision if: The property is still going through probate A trust owns the property Multiple heirs disagree about what to do One heir wants to live in the house The property has a mortgage or reverse mortgage The home is located in another state A beneficiary receives Medicaid or other needs-based benefits The property may be subject to estate recovery Someone wants to give or transfer their share to another person There are questions about undue influence, debts, or the validity of the will An elder law or estate planning attorney can help coordinate the property decision with Medicaid planning, trusts, incapacity planning, and the rest of the estate. Learn more about using estate planning to prepare for Medicaid and the difference between elder law and estate planning . Questions to Ask Before Deciding Before moving in, selling, renting, or agreeing to share the property, ask: Who legally owns the property right now? What debts, taxes, insurance, and repairs must be paid? What is the property worth in its current condition? What does each heir want to happen? Can the heirs afford to keep the property? What will happen if one heir changes their mind later? What are the legal and tax consequences of each option? Answering these questions can help the family make a decision based on financial facts rather than pressure or emotion. Make a Decision That Fits Your Circumstances There is no single best choice for every inherited house. Moving in may preserve a family home but create ongoing costs. Selling may provide clarity but require difficult conversations. Renting may produce income but comes with landlord responsibilities. Keeping the property with siblings may work, but only if the owners have a clear agreement. Take time to understand the property and document its value. Communicate with the other heirs and obtain professional advice when the situation is complicated. A thoughtful decision can help protect the value of the inheritance and reduce future conflict.
