To our readers: Last week, we began to answer a question from a family that believed it was being held captive by a large bank trust department that oversaw and invested the deceased husband’s comparatively modest estate.

With the average trust today being less than $250,000, we pointed out that liquid assets are generally invested in common pools of securities or mutual funds that don’t require individual attention, and that it is not unusual for a trust officer to handle a hundred or more such trusts.

We also warned that most trusts in existence today are the creations of word processing programs that include provisions that give trustees wide latitude to make investments (even though the deceased may only have purchased CD’s) and to charge the bank’s posted compensation rates.

Lastly, we warned about conflicts of interest where the trust side of the bank invests trust assets on the investment side of the bank in proprietary funds that produce meager returns and charge more fees.

What to do?

First, contrary to popular belief, more than 98 percent of those who die each year will NOT have taxable estates under current law. Therefore, computer-generated trusts that are intended to save estate taxes are overkill.

Second, the choice of a successor trustee is important to those who wish to create revocable living trusts during life and to be the trustee until death or disability, and also to those who establish trusts in their wills. Therefore, prospective successor trustees should be interviewed, not named blindly. If a child or family member is to be named, provisions should be included in the trust to ensure regular accountings to beneficiaries.

Third, no matter what kind of trust you may choose to establish, the instrument should contain investment parameters with which you are comfortable. For example, if you have invested in CD’s and money markets throughout your life, it is unlikely that you would want a stranger investing your assets after death in risky stocks or financial instruments you don’t understand.

Fourth, the calculation of trustee fees should be clearly spelled out in your trust document. If you are going to transfer the family home into the trust, you should negotiate either no fee or a minimal fee based on the value of that residence. Further, if you set the investment parameters in your document, the trustee’s risk of making bad investments is reduced and, therefore, the fee should be commensurately reduced.

Fifth, your document should include language about replacement of the trustee if expectations of service are not met. In order to attempt to avoid an expensive court proceeding, you may choose to provide in your document that if a high percentage of the beneficiaries are dissatisfied with performance, the trustee should resign in favor of another named trustee.

Sixth, stay away from naming multiple trustees to act together because it is difficult to get anything done when acting by committee. Include in your trust exactly what the trustee is to do and when. In some instance, a special trustee -- an individual who knows the family circumstances – may be appointed to make recommendations to the trustee.

Seventh, find a lawyer who will listen to your circumstances and then prepare a document that fits your needs and goals.