The law in New Jersey gives your trustee a lot of authority.  Your living trust is much more than just a trust document that says which heirs get what percentage of your estate or which specific items that you leave behind should you die. A living trust details how and when heirs are to receive their inheritance, who is to take over any businesses in question, and many crucial issues of your estate. A trust can be a very specific statement of how your estate is to be handled when you die. Therefore, the choice of a trustee for your living trust is a very important decision in your NJ estate planning process.

Choosing a Friend as a Trustee.  The Right Choice?

When choosing a person to be the trustee of your trust, you need to answer this question:

          Who can step into my place and confidently act as I would in carrying out my wishes? In other words, who do I trust the most to make the decisions I would have made if I were alive to make them?

It is vitally important to choose someone that you have full faith and confidence in. You should feel at ease that he or she will carry out your instructions as they are written in your trust and estate planning documents. Some typical choices include a:

          Close family friend

          Close family member

          Adult Child

          Professional trustee

While you may feel completely secure in trusting this huge responsibility for carrying out your wishes to a close friend, there are several situations when that is not wise or possible. In that case, your wishes can be addressed by using an outside trustee.

NJ Living Trusts: Choosing an Outside Trustee

If you do not have a close friend or relative that you feel comfortable leaving this job to, or if by selecting one of the heirs will cause conflict, then there are other options. You can hire an outside trustee like:

          Your bank’s trust department

          A trust company

          Your lawyer

          A financial advisor

          A professional trustee

These professionals are well versed in what it requires to be a trustee and can often work more expediently and effectively, which saves the heirs money and time. While there are many benefits to not having a family member involved as the trustee of your living trust; there are also some drawbacks to using a bank or trust company as your trustee.

Banks and professional trustees charge fees for their services. They generally (but not always, so check around) serve as trustee with a minimal estate value of around $700,000

No matter whom you choose, you want to be sure that you have full confidence in them to do exactly as you want, no matter what other people say. There may be heirs who are unhappy with the terms and conditions of the living trust and will try to sway your representative to do as they want. Knowing that you have a strong, trustworthy individual protecting your wishes will provide peace of mind.

Duties of a Trustee for a New Jersey Trust

While the powers of a trustee are variable, as the creator of a trust you can determine the extent of the trustee’s powers in the trust agreement or in the will. A trustee must thoroughly understand the duties which accompany his or her status as legal owner of the trust assets.  The duties of a trustee vary from state to state, but in New Jersey, a trustee’s duties include the following at a minimum:

1.    The trustee has a duty to carry out the trust in accordance with the terms of the trust agreement or will.

2.    The trustee has a duty not to delegate the trustee’s duties to another individual-any duty which calls on the trustee to exercise skill and judgment may not be delegated (e.g., investment responsibilities). However, this duty does not prohibit the trustee from hiring professional experts, legal counsel, accountants, for example, professional investment advisors to evaluate the suitability and nature of trust investments.

3.    The trustee has a duty to exercise a reasonable degree of skill and care that would be required if the trustee were dealing with his or her own assets.

4.    The trustee owes a duty of loyalty, good faith, and honesty to the beneficiaries to faithfully administer the trust solely in their best interests.  This duty of loyalty prohibits the trustee from self-dealing with the trust.

5.    The trustee has a duty to possess, protect, and preserve the trust property.  The trustee must use ordinary diligence and care in the making of claims and in the collection of income and other receivables.  The trustee has a general duty to defend the trust and the interests of the beneficiaries against those who challenge the validity of the trust.  While the trustee is not an insurer of the trust assets, the trustee must use reasonable care and diligence in preserving and protecting the property (e.g., obtaining insurance on the property if an ordinary, reasonable, prudent individual would do the same).

6.    The trustee has a duty to segregate the trust property.  A trustee is required to keep trust property separate from the trustee’s own property.  If a trustee co-mingles his or her own property with the trust property, the trustee is liable for any losses resulting from the co-mingling.

7.    The trustee has a duty to make the trust property productive and increase its value.  The standards normally used to  make the property productive are controlled by a "prudent person” investment rule are decisions and actions in which the trustee may acquire, invest, reinvest, exchange, sell, and manage trust property in the same manner in which people of ordinary, reasonable, and prudent standards would manage it.

8.    The trustee has the duty to treat all beneficiaries fairly and impartially.  If a trustee has the duty to distribute income according to the trustee’s discretion, the trustee’s decision will be sustained if made in good faith.  The trustee must avoid behavior which favors one beneficiary over another.  If one beneficiary is favored over another, and the trustee cannot show good faith and good cause for the different treatment, the trustee may be accountable for a basis that can be proven by a beneficiary whose interests were injured.

Trust attorney serving these New Jersey Counties:

Monmouth County, Ocean County, Essex County, Cape May County, Mercer

County, Middlesex County, Bergen County, Morris County, Burlington County, Union County, Somerset County, Hudson County, Passaic County