Sample Trust Language Appointing Trustee

The following sample language comes from a trust that was drafted years ago, however it remains useful in understanding issues to consider when drafting trusts:

1. Appointment of Trustee. During my lifetime, [TRUSTEE] shall act as the sole Trustee of all trusts created in this agreement, with the full powers, duties and responsibilities as set forth in this agreement. Upon my death, if at any time the Trustee desires or deems it advisable to have an additional independent fiduciary to serve with him, then I grant him the power to retain such other independent person or corporate fiduciary as he may desire. Written notice of that action shall be given to the adult beneficiaries of this trust.
2. Successor Trustees. If [TRUSTEE] does not serve, then I appoint [SUCCESSOR TRUSTEE], as successor Trustee in his place to fill the vacancy. If any independent Trustee appointed and designated by the individual Trustee pursuant to Item [#] does not serve, then I direct the individual Trustee then serving to appoint an independent Trustee to serve in its place, which (unless otherwise approved by the Trust Protector) independent corporate Trustee shall be a corporate institution within the continental United States having trust assets under administration of at least $100,000,000.00.
3. Restriction on Appointment of Trustee. No beneficiary who [fits certain criteria], including but not limited to [RESTRICTED PERSON], shall be eligible to serve as Trustee of this Trust or any sub trust established hereunder.
4. Resignation and Replacement of Trustee. A Trustee may resign by giving sixty (60) days advance written notice to the other Trustee and all adult income beneficiaries of the trusts created in this agreement. In addition, the individual Trustee may at any time, without cause, remove the independent Trustee serving and appoint a successor independent corporate Trustee, which (unless otherwise approved by the Trust Protector) shall be a corporate institution within the continental United States having trust assets under administration of at least $100,000,000.00.
5. Power to Employ. The Trustee shall have the power to select and employ any person, firm, or corporation engaged in rendering inves1ment counsel; to advise them in making investments, managing securities, or making decisions with reference to the purchase, retention, sale, or other disposition of property or securities in a trust created in this agreement; but this provision shall not require the Trustee to follow the advice of any such investment counsel The Trustee also shall have the power to employ attorneys, accountants, brokers, banks, custodians, and other agents, and to delegate to them such duties, rights, and powers as the Trustee shall determine, and for such period of time as the Trustee thinks proper, without liability for any mistake or default of any such person selected or retained with reasonable care and prudence.
6. Trust Protector. Grantor hereby appoints [TRUST PROTECTOR] as the initial Trust Protector. The Trust Protector shall have power to act upon the request of any interested party (e.g., the Trustee, the Grantor, Grantor’s children, or any remainder beneficiary). The Trust Protector may remove and replace any Trustee with or without cause. The Trust Protector shall have power to amend this Trust to ensure that it [achieves stated goals]. The Trust Protector may require that the Trustee convey the trust assets to another trust on substantially similar terms either for the purpose of changing the trust’s jurisdiction, for enforcing the spendthrift provisions of this trust, or for the convenience of any interested party. The Trust Protector shall also have power to enforce the terms of this Trust. During Grantor’s lifetime, Grantor may replace the Trust Protector at any time with or without cause.

Trust language like this is first used to idenify the Trustee. Depending on the type of trust, the Grantor might be the trustee during his or her lifetime, or ther emight be a tax, Medicaid or other reason why the Grantor should not serve. There should be a way to appoint successor trustees without judicial intervention. This usually includes identification of successors, but there should also be another method of naming successor trustees since life is uncertain. In this language, a Trust Protector has authority to name other successors. Trust language need not, but can, identify persons who cannot serve as trustee (e.g., ex-spouses, in-laws, etc.). The trust should always include a way for trustees to resign; most professional trustees will refuse to serve unless they have a way out of troublesome trusts. Whether the trust language should require a professional trustee with minimum assets under management is an open question since professional trustees can be expensive and sine most will not accept a trust under certain minimum asset threshholds. Also, many professional trustees will not agree to manage real estate, so if the trust owns or will own real estate, using a bank as trustee might be a non-starter. The provision in this language relating to emplying certain professionals is often included in a broader section on trustee powers. This language includes a concise provision appointing a trust protector that was not in the original trust language. Again, this is adviseable to permit flexibility without the necessity of judicial intervention. This language gives the Trust Protector power to decant the trust into a similar trust, which is a helpful way to make changes and keep the trust fresh, but it can have negative tax consequences and possibly negative Medicaid consequences.