When Trustees finish their work distributing trust assets, they often utter the same comment about the problems they encountered managing a trust: “Nobody knows what to do as a trustee until the job is almost over. It would be nice to know before the job begins.”
The complete answer to this question calls for the template of a textbook. But Tina Fey, late of Saturday Night Live, unknowingly gave the simple answer about the trustee’s job when she described a leader: “In most cases being a good boss means hiring talented people and then getting out of their way.”
The trustee’s job is to be the “Boss” who seeks out and supervises the experts who conduct the administration of the trust. This role involves finding and directing the most competent people available to manage the requirements found in the terms for the instrument known as a trust.
For most trusts, the management team which the trustee will need includes an appraiser, an accountant, an attorney, and a financial advisor. John Aust, PhD., of CP Appraisers in Orange, who has taught Appraisal Classes at Santiago Canyon College for over twenty-five years, describes the trustee’s team as a “Support Group for the Trustee.”
“The smarter the trustee,” Aust explains, “the more likely she is to start out as more of a recruiter than a manager.” Dr. Aust quotes Warren Buffet when he explains how a trustee approaches composing a management team: “The wise man does in the beginning what a fool does in the end.”
Often, when parents who die have left a trust with one of their children as a successor trustee, that successor has never managed a trust before. “Finding a team of advisors is not a challenge,” Professor Aust explains, “but finding a team of competent advisors is a roll of the dice without some experienced help.”
Dr. Aust recommends a simple checklist for the start-up trustee:
In selecting an Accountant, be certain to retain a CPA who has experience with filing Estate Tax Returns, also known as Form 706. These are sometimes needed even for estates well below the taxable level known as the Exemption Equivalent, which in 2016 is $5,450,000.00.
The Trust’s attorney should have experience with both Probate and Trust administration, since some estates will have assets both in and out of a trust, explains Dr. Aust. “If an asset is outside of the trust,” Aust notes, “the Attorney often needs to know how to steer that asset through Probate. “
Appraisers need more than just a license or a degree in finance, explains the professor. “Anticipate that an appraiser is basically a professional witness to the value of the assets,” states Aust. “The trustee needs to work with someone whose numbers are not just professionally correct; they need to be defensible in court by someone who won’t be intimidated by that prospect.”
Finally, the financial advisor should have both the personal professional financial experience with probate and trust administration and a strong financial organization to back up the advisor’s efforts. “The best advisor in the world still needs to have a strong back room to support the job of allocating assets after the original trustees have died,” advises Dr. Aust.
Asked to give a final summary of the job of a trustee, Dr. Aust replied by quoting the Taoist philosopher Lao Tzu:
“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.”
Tina Fey, Warren Buffet, and Lao Tzu all appear to agree with Dr. Aust about a trustee’s job: Start out in the beginning by finding the right people, be close to invisible, and let the experts do their work.