Can I Select a Trustee Who Is Also a Beneficiary of the Trust?

Including a Trust in your estate plan is a great way to help ensure your assets are divided according to your wishes in a timely manner that minimizes taxes. Most Grantors (the person funding the Trust) leave their assets to close family members (known as Beneficiaries). Many also consider appointing one of these Beneficiaries as the Trustee — the person responsible for administering the Trust. But is this a good idea?

In Florida, you can legally select a Beneficiary to serve as Trustee. This is a personal decision, and whether it’s the right choice depends on your family dynamics, estate planning goals, and the complexity of your trust.

There are two key reasons many Grantors find naming a Beneficiary as Trustee appealing:

• It is someone you implicitly trust and who understands the family dynamics.
• The Trustee has a vested interest in ensuring the assets are promptly and properly distributed.

However, there are also potential pitfalls to consider:

• If there’s a history of conflict or tension among Beneficiaries, selecting one of them as Trustee may exacerbate those issues and lead to disputes over the appointment.
• Naming one Beneficiary as Trustee could give the appearance of favoritism, which can create resentment or even lead to legal challenges.
• A Beneficiary-Trustee may face conflicts of interest, especially if they’re making discretionary decisions that affect their own share of the trust.
• Even without actual misconduct, the appearance of a conflict of interest can be enough to cause legal challenges — potentially delaying distribution and increasing administrative costs.

Because of these concerns, some Grantors choose to appoint an independent Trustee — someone who is not a Beneficiary — to preserve neutrality and reduce the likelihood of disputes.

When a Beneficiary Can Serve as Trustee

That said, in many situations it may be entirely appropriate — and even beneficial — for a Beneficiary to serve as Trustee. This is especially common in continuing trusts established for a Beneficiary’s benefit, such as when a trust is designed to last beyond initial distribution (e.g., to protect assets from creditors or preserve wealth across generations).

In a continuing trust, it is permissible for the Beneficiary to serve as the sole Trustee of their own trust. Asset protection can still apply, provided the trust is properly drafted. For example, the trust can include provisions that limit distributions to ascertainable standards, such as for the Beneficiary’s health, education, maintenance, and support (HEMS). These limitations help preserve the trust’s integrity and may shield the trust assets from creditors or marital claims.

Key Considerations When Choosing a Trustee

Whether you choose a Beneficiary or an independent third party, your Trustee should be someone who is:

• Financially responsible, with a basic understanding of managing money and records.
• Capable of managing legal and administrative duties, including working with attorneys and accountants, and adhering to Florida’s legal requirements for trust administration.
• Willing and able to devote the time necessary to fulfill their obligations.
• Strong enough to enforce your wishes, even if pressured by Beneficiaries who want more than what the trust permits.

There is no one-size-fits-all answer. Choosing a Trustee is a deeply personal decision that depends on your unique circumstances. Naming a Beneficiary as Trustee can work well in some cases — particularly in long-term trusts with appropriate safeguards — while in other situations, selecting a neutral third party may better serve your intentions and reduce the risk of conflict.

Working with an experienced estate planning attorney can help you evaluate your options and craft a trust that balances flexibility, protection, and family harmony.

Huth, Pratt & Milhauser

Huth, Pratt & Milhauser value your support and appreciate you being part of our community. Feel free to share this newsletter and if you know anyone who could benefit from our services, we would greatly appreciate an introduction.

HPM is a specialized law firm that offers a wide range of legal services in the specialty areas of Wills, Trusts, Estates, Probate and Guardianship for planning, administration, and litigation. The experience and skills of our attorneys and staff, coupled with our knowledge of applicable law, enable us to provide exceptional representation to our clients.

We proudly serve clients throughout the country and around the world from our Boca Raton, Florida office. We strive to provide superior and focused counsel in a timely manner and at a competitive price.