What Is the Role of a Trustee in Estate Planning?
July 28, 2025
When individuals think of estate planning, they often focus on wills, power of attorney, and beneficiary designations. But a pivotal role that’s frequently misunderstood is that of the trustee—the person or entity entrusted with administering a trust.
Whether you're setting up a trust to avoid probate, provide privacy, reduce taxes, provide for minor or disabled beneficiaries, or maintain long-term control, the trustee plays an indispensable role. With offices in Green Bay, Wisconsin, and Pulaski, Wisconsin, Lewis & Van Sickle, LLC is here to help you better understand that role.
What Is a Trustee?
A trustee is a person or institution appointed by the settlor (the person creating the trust) to manage trust assets for the benefit of the beneficiaries. The trustee holds legal title to the trust property but must act in the best interests of the beneficiaries.
Under Wisconsin law, anyone over 18 with legal capacity may act as a trustee, including the settlor themselves, a trusted friend or family member, or a professional like a bank or trust company.
Core Fiduciary Duties Under Wisconsin Law
Wisconsin trustees occupy a fiduciary position, meaning they must uphold duties of loyalty, prudence, impartiality, and transparency:
Duty of loyalty: Trustees must act solely in the beneficiaries' interest, avoiding any personal gain or conflicts of interest.
Duty of prudence: Trustees must manage and invest assets wisely, using care and skill, and avoiding speculative decisions.
Duty of impartiality: When there are multiple beneficiaries, the trustee must treat them fairly and avoid favoring one over another.
Duty of transparency: Trustees must keep accurate records, provide timely updates, and make trust documents and accountings available to beneficiaries upon request.
Next, let’s take a look at the two types of trustees: individual and professional.
Individual Trustees
These are often close family members or friends of the settlor. They typically serve for personal trusts, such as revocable living trusts, and may be more familiar with the beneficiaries’ personal circumstances.
Professional Trustees
Banks, trust companies, and attorneys often serve as professional trustees. These entities bring knowledge, neutrality, and administrative capacity.
Each option has its pros and cons. Individual trustees may be more personal and cost-effective, but professional trustees bring continuity, experience, and impartiality.
Duties and Responsibilities of a Trustee
Being a trustee is a position of great trust and responsibility. Beyond simply managing assets, trustees act as stewards of the settlor’s wishes, balancing the interests of multiple beneficiaries while working through legal and financial obligations.
Let’s take a closer look at the duties and responsibilities of a trustee:
Accepting the Role and Reviewing the Trust
Trustees must review the trust document thoroughly, understand the terms, and confirm their acceptance of fiduciary responsibility in writing.
Identifying and Gathering Trust Assets
A trustee must take control of all trust property, including real estate, bank accounts, investments, and personal property. Accurate valuation is essential.
Notifying Beneficiaries
Trustees are required to notify all beneficiaries of the trust's existence and their rights under it. This is often done through a formal letter.
Managing and Protecting Assets
Ongoing management includes paying bills, making investments, maintaining insurance, overseeing rental properties, and avoiding waste or loss.
Filing Taxes and Satisfying Debts
The trustee must file appropriate tax returns for the trust and pay any outstanding debts of the trust or the deceased settlor.
Distributing Assets to Beneficiaries
Trustees must follow the distribution instructions laid out in the trust—whether making immediate, staggered, or discretionary disbursements.
Maintaining Detailed Records
Detailed records of income, expenses, and asset movements are critical. Beneficiaries have the right to receive accurate accountings at regular intervals.
Trust Termination
Once all duties are completed and assets are distributed, the trustee must close the trust, confirm that tax matters are settled, and provide a final report to beneficiaries.
Trustee Compensation in Wisconsin
Wisconsin law allows for “reasonable compensation” to be paid to trustees. This is often based on the specifics of the trust, time spent, and the skills required.
Professional trustees may charge a percentage of trust assets annually, often between 0.5% and 2%, or apply a flat or hourly fee.
Individual trustees, such as friends or family members, may waive compensation or be paid an hourly or fixed fee if permitted by the trust terms.
All compensation should be clearly documented, and in the case of disputes, courts may step in to approve or modify fees.
Choosing the Right Trustee
Choosing a trustee is a critical decision in the estate planning process. The wrong trustee can lead to mismanagement, delays, or conflict among beneficiaries. When making your selection, consider the following:
Trust intricacies: The more complicated the trust, the more experience and skill the trustee will require.
Impartiality: If family dynamics are tense, a neutral third party may prevent disputes.
Location: A trustee living in Wisconsin may better understand local real estate laws and court procedures.
Longevity: Especially for trusts intended to last decades, it’s important to choose someone likely to outlive the trust—or to name an institution.
Ultimately, the best trustee is someone who combines integrity, competence, and a willingness to serve with the ability to communicate effectively with beneficiaries. Taking the time to carefully select the right trustee can save your loved ones significant stress and protect your legacy.
Modifications and Trustee Authority
Wisconsin’s Uniform Trust Code permits some flexibility when circumstances change. For example:
Trusts may be modified or terminated with the consent of the settlor and all beneficiaries.
Courts may modify or terminate trusts when the trust’s purpose becomes impossible or impractical to achieve.
Trustees may, in some cases, transfer assets into a new trust (known as decanting) when it better serves the beneficiaries.
Trustees should proceed cautiously and seek legal guidance before making any substantive changes.
Traits of an Effective Trustee
An effective trustee isn’t necessarily a financial expert or a lawyer, but certain qualities are non-negotiable. These include:
Integrity: Honesty and adherence to the trust’s terms are essential.
Organization: The trustee must manage deadlines, filings, and detailed records.
Communication: Regular updates and responsiveness to beneficiary questions reduce conflict.
Financial judgment: Trustees should either possess or have access to investment and tax advice.
Neutrality: A fair and even-handed approach builds beneficiary trust and prevents litigation.
A trustee’s commitment to these traits not only enables smooth trust administration but also fosters confidence and peace of mind among all parties involved.
Common Challenges Trustees Face
Serving as a trustee can be rewarding, but it isn’t without challenges. Even well-intentioned trustees can make mistakes, particularly if they’re unaware of their legal obligations. Common difficulties include:
Disputes between beneficiaries over perceived favoritism or delays in distribution.
Pressure from family members to deviate from the trust terms.
Failure to diversify investments or reinvest cash properly.
Missed tax filings or miscalculated distributions.
Inadequate documentation, resulting in legal vulnerability.
Trustees should never hesitate to consult with a qualified estate planning attorney to confirm compliance.
Successor Trustees and Contingency Planning
No trustee can serve forever. That’s why every well-drafted trust document should include provisions for successor trustees—individuals or institutions who take over when the original trustee can no longer serve.
Successor trustees step in when:
The original trustee resigns
Becomes incapacitated
Passes away
Is removed due to breach or misconduct
The trust document should clearly outline the order of succession, as well as the process for appointing a replacement if no named individuals are available. Failing to name a successor can lead to court intervention and unnecessary delays.
Including multiple backup trustees and allowing flexibility for the beneficiaries or a third party to nominate a replacement provides continuity and prevents administration breakdowns.
Trustees and Digital Assets
Trustees must be prepared to manage more than just bank accounts and real estate. Digital assets—such as cryptocurrency, cloud storage accounts, social media profiles, digital photos, and email accounts—can be significant both financially and sentimentally.
Trustees need to:
Identify all digital assets, including online banking, crypto wallets, and digital subscription services
Gain access using credentials provided in the estate plan or stored in a secure password manager
Understand the terms of service and privacy policies of each digital platform
Maintain secure records of logins, passwords, and two-factor authentication tools
Wisconsin has adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which governs how trustees can access digital property. The trust should include express authority allowing the trustee to manage and dispose of these assets legally.
Neglecting digital assets can leave valuable property unrecoverable and open to theft or loss. Planning ahead is critical.
Contact an Estate Planning Attorney
Trustees play a critical role in Wisconsin estate planning, acting as fiduciaries, asset managers, communicators, and often, problem solvers. If you need assistance in designating a trustee or other estate planning matters, you can count on our professionals at Lewis & Van Sickle, LLC.
We serve clients in Green Bay, Wisconsin, and the surrounding areas, including Oconto, Shawano, Kewaunee, and Sturgeon Bay. Contact us today to schedule a consultation.