Many clients do pick a family member trustee; however, other times professional trustee such as a corporate fiduciary or a CPA is chosen. It depends on the type of trust, the assets involved, legal requirements that must be followed, and family relationships.
The advantages of using a family member trustee is that they care about you and your family, often dont charge, and can get things done faster because theres less red tape. The disadvantage of using a family member trustee is that they often arent organized, dont have experience, and may drop the ball on trustee duties.
The advantages of using a professional trustee is that they have experience, know how to jump through the legal hoops, and are covered by malpractice insurance. The disadvantages of using a professional trustee are the expense and delay in getting things done.
Often, if a client is married, he or she will name the spouse as co-trustee of a revocable living trust to serve together when they are both alive and well. If one spouse becomes incapacitated or dies, the other spouse can continue to serve as trustee.
For advanced planning trusts that are set up to avoid the federal estate tax, its important that the trust maker have no control and that legal procedures are carefully followed; therefore, a professional trustee is more commonly used.
Lifetime trusts are used to provide assets for the benefit of beneficiaries without giving the assets directly to them. This provides asset protection so assets cant be taken by creditors or divorcing spouses. If the beneficiary holds both full legal title as trustee and full beneficial title as the beneficiary, the doctrine of merger applies and the court can order the beneficiary to distribute trust assets to his creditor.
On the other hand, if a professional trustee serves as trustee (or as a co-trustee with the beneficiary), the doctrine of merger does not apply and the assets are protected.
Consult with a qualified estate planning attorney to determine whether a family member trustee or a professional trustee is right for you in each trust situation.