But problems arise if a trustee tries to sell the position to the highest bidder. An alternative is to give that power to some or all of the beneficiaries. "This can be problematic, however, if a beneficiary abuses the authority by threatening a trustee with removal if he or she doesn't grant a requested distribution," says Paul McCawley, an attorney at Greenberg Traurig in Fort Lauderdale, Fla.

But, "Mere dissatisfaction is usually not enough," notes Neal Brodsky, an attorney at LeClairRyan in Norfolk, Va.

If worse comes to worst, trustees can be taken to court. That's expensive, though, especially considering "trustees can defend themselves out of trust assets," admonishes Cornish, the Boston attorney. "The best way to keep a trustee on his or her toes is to have the removal and replacement option readily available."

Potential Pitfalls
Indeed, keeping trustees on their toes is important. Trust mismanagement can be devastating. "At worst, the trustee could rob the trust," says Brian Frank, a trust and financial advisor with Morgan Stanley in Atlanta. Or the trust could become disqualified if the trustee is negligent. That would mean the assets incur hefty tax penalties and legal expenses and the grantor's wishes are thwarted.
Even the checks and balances of co-trustees don't solve all potential problems. Co-trustees might lock horns, or one of them could have shortcomings. "The most fundamental duty of a trustee is loyalty," insists Debra Anderson, a senior vice president at MassMutual Trust Co. in Enfield, Conn. "Trustees must always act solely in the interest of the beneficiaries."

That's not as simple as it sounds. "Because fees are usually tied to the amount of assets under management, trustees have an incentive to keep assets rather than distribute them," says Melissa Olszak, a financial planner at Lake Street Advisors in Portsmouth, N.H.

Yet institutional trustees may be safer than friends and relatives. "They are examined by federal and state authorities and [have] internal audits," says David Rahn, president of First Foundation Bank in Irvine, Calif. "You can also sue them for restitution, since they have deeper pockets than individuals."

Safeguards
One way to head off trustee disasters: have them provide regular accounting, suggests Dick Bennett, a partner at Savant Capital Management in Rockford, Ill.

Most trusts require reporting at least annually, some more frequently. "It can be formal or informal, but transparency is critical," says Robert DiQuollo, president of Brinton Eaton, a wealth advisory firm in Madison, N.J.

Beneficiaries should do their part, too. "Mismanagement is more likely to occur if the beneficiaries are kept in the dark," says Luke Sotir, an attorney at Highland Financial Group and a financial advisor at AXA Advisors in Wellesley, Mass.

Bonding trustees is another safeguard. "If the trustee does steal, you can get restitution from the bonding company," explains William Abrams, an attorney at Abrams Garfinkel Margolis Bergson in New York.