The Role of a Trustee in Michigan Trusts

One of the most important decisions you and your family make when establishing a trust is choosing a trustee. The selection of a person or institution to represent you after your passing requires careful consideration and due diligence. Much thought is necessary to ensure your wishes are carried out exactly as stated in the trust document. To ensure successful distribution of assets it remains vital to choose someone who has adequate time for the job. Another requirement involves a desire to fulfill your wishes. Most importantly, choose a person or organization that is trustworthy.

Who Can I Trust to Be a Trustee?

Michigan law states that a trustee must be 18 years of age or older, and be of sound mind. This sounds simple enough; however, choosing a trustee is a bit more complicated. A trustee must possess specific skills that ensure your estate will be distributed properly. For example, common sense, good judgment, knowledge of financial matters, organizational skills, record keeping abilities, communication skills, trustworthiness, and other abilities. Of course, estates vary in size and complexity. Some estates are quite simple; others are complex and may include businesses. If a business is involved choosing a trustee becomes a bit more complicated. In fact, some families may have more than one trustee in these cases. Basically, there are several options when choosing a trustee:

  • Family member
  • Institution (bank)
  • Professional advisor known to family, or attorney
  • Friend or business associate

Does a Family Member Make a Good Trustee?

Family members offer many advantages. First of all, they share your values and you KNOW them. Also, a family member understands the family dynamics and can easily communicate to all beneficiaries. Small, uncomplicated estates can easily be handled by family members. If they have any concerns or questions, the trustee may contact a trust attorney who established the trust document for guidance. Finally, family members save you money. Some even work for free!

Should I Use a Bank as a Trustee?

A financial institution may be used as trustee. The downside is that the bank does not know your family and many times you meet with different people. On a positive note, the bank will be objective. Banks are sometimes used for large trusts that are being distributed as needed.

Trustee Fees

Trustee fees can vary widely depending on the complexity of the trust, the trustee’s level of expertise, the amount of time and effort required to manage the trust, and the trust agreement itself.

In some states, statutes provide guidelines or limits on trustee compensation.

For instance, in the State of Florida, trustee compensation is guided by Florida statutes which specifically state that trustees are entitled to reasonable compensation under the circumstances.
(Di Pietro Partners, PLLC,, Accessed 26 May, 2023)

Michigan law does not specify a fixed rate for trustee compensation. Instead, the amount of the compensation is typically determined by the terms of the trust agreement. If the trust agreement does not specify the trustee’s compensation, the trustee is entitled to “reasonable compensation,” which can be determined based on various factors.

It’s common for professional trustees (such as banks or trust companies) to charge a percentage of the trust’s assets, often around 1% to 1.5% per year. Individual trustees might charge less, especially if they are family members or close friends. Some trustees charge hourly rates, especially for extraordinary services that are not part of the routine administration of the trust.

Should My Attorney or Professional Advisor Be Appointed as Trustee?

This depends on the size of the estate and the feelings of the beneficiaries. Some organizations prohibit this practice. So, check first to see if this is feasible.

Does Using a Friend or Business Associate Make Sense?

Sometimes this is the best option especially if there is no family member able to handle the task. Once again, make sure this person is trustworthy and provide a back-up trustee.

Trustee Responsibilities

Trustees have a great deal of work after a loved one passes away. Tasks include:

  • Paying bills
  • Notifying creditors
  • Paying any debts
  • Securing and selling any property
  • Changing locks if necessary
  • Maintaining property
  • Distributing assets
  • Paying Federal, State, and City Taxes
  • Paying property taxes
  • Keeping business running

These responsibilities during a very sad time may be overwhelming. So, make sure you choose an honest family member that possesses great emotional strength.

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