What Makes an Ethical Trustee?

If you are creating a trust for the first time, you might wonder how a trustee should act in the position. Choosing the right person is important since your trustee will have the responsibility of administering your trust and seeing to it that your beneficiaries will receive from the trust whatever you wish to give them. 

Some trustees abuse their position. They deprive beneficiaries of their rightful inheritance and refuse to honor the terms of the trust. To wisely choose a trustee, it may help to know, as Kiplinger explains, the qualities an ethical trustee should possess. 


A trustee acts as a fiduciary. This means the trustee has a duty to the person who created the trust and to the beneficiaries of the trust. As part of this duty, a trustee must take care of the assets in the trust so they can pass to beneficiaries without damage or loss. If the trustee has the job of investing the assets, the trustee must make reasonable investment decisions. Recklessness in investment or administration may cause loss of assets and deprive beneficiaries of their inheritance. 


Ethical trustees understand that they are not to enrich themselves from the trust. They must act in the interests of the beneficiaries and avoid conflicts of interest when managing trust assets. In addition, good trustees provide trust information to beneficiaries according to the terms of the trust. Hiding information such as accounting data may tip off beneficiaries that a trustee is not being honest. 


A trustee should be impartial. This means not taking sides if beneficiaries argue over who should get certain assets from a trust. The potential for familial conflict is why some families choose a non-relative to be a trustee. Sometimes a parent may pick a child to be a trustee, but the child may show favoritism to one beneficiary over others. Taking a look at your current family dynamics may help you decide if a family member can be truly objective.