Choosing a trustee can be just as important as establishing a trust itself. Often, an individual will designate their child to help administer their plan for the trust. Clients may believe that appointing their child as a trustee will save them the expense of hiring a professional fiduciary. However, in some circumstances, the expense may be worthwhile. Before appointing your child as a trustee, you should consider the potential drawbacks of putting your child in charge of your life.
What Problems Can Arise When a Child Is a Trustee?
One major issue with appointing a child as a trustee is the inherent conflict of interest. A child trustee is also a likely beneficiary of your trust. While the trustee must be fair in administering the trust’s assets, a child trustee must balance that obligation with their own interests in the trust. Problems can occur even when the child trustee does not intend to prioritize their personal interests. The sheer potential for a conflict of interest may lead a child trustee to believe their decisions are fair when they are actually self-serving.
Additionally, if you have multiple children, appointing one child as a trustee can breed jealousy among siblings. Some clients wish to designate all of their children as co-beneficiaries to avoid this precise issue. However, appointing multiple child trustees can lead to problems with agreeing on the important decisions that the role of a trustee requires. In addition to these problems, biases may arise if a child must administer a parent’s assets to a stepparent beneficiary, with whom their relationship may be more fraught.