THE TRUSTEE CRISIS: Navigating the Challenges from Wealth Actually

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Frazer Rice

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THE TRUSTEE CRISIS: Navigating the Challenges

58 minutes Posted Mar 9, 2026 at 1:11 pm.

The Coming Crisis in Trusteeship

Importance of Modern Trust Planning

Challenges with Individual Trustees

The Dwindling Pool of Qualified Trustees

Functions and Responsibilities of a Trustee

The Emotional and Interpersonal Aspects of Trusteeship

Managing Risk in Trusteeship

Building a Pipeline for Future Trustees

The Role of Education in Trusteeship

Improving the Perception of Trusteeship

The Need for Better Trust Education

Bifurcation of Trustee Functions

Distribution Functions and Beneficiary Relations

Custodial Responsibilities in Trusteeship

Consequences of Poor Asset Management

Curriculum for Trustee Education

Opportunities in the Trust Industry

.068)Welcome aboard, Jennifer.

.723)Thanks Frazer, how are you today?

.782)I am doing great. We're going to dive into a topic that is near and dear to both of our hearts. And that is what I'm describing as the coming crisis in trusteeship, but I think it's already here. Which is the concept of qualified trustees being in short supply, right in the face of a gigantic wealth transfer. And first of all, before we get into that, just describe what you do on a day to day basis first.

.445)Sure, I actually wear a bunch of hats. Day to day, right now, I'm a full-time practicing trust and estate attorney. I'm also an individual trustee for a variety of trusts that need either somebody here physically located in Delaware for a short period of time or even a successor trustee. But I've also spent many, many years building programs in trust management and trust administration.

.182)A full plate to be sure. To me, I came out of Wilmington Trust and another trust company served an individual trustee too. I've seen all these different flavors of trusteeship. My general sort of bon mot around that is that the individual trustees. I'd say 95 % or higher don't really have an appreciation of the risk and responsibility that they're taking on. And then the corporates have their own issues, which we'll get into in a little bit. If we pull back even further, modern trust planning in wealth management, why is this so important?

.275)That's massively important. It's not just for the mass affluent or the ultra high net worth. It's for everybody. We have all of these assets that we have this hyperfocus on building and increasing our wealth. Making sure that we have the ability to sustain ourselves throughout our entire lives.

.338)One of the things I tell people as far as trusts are concerned is that, you know, we're putting these structures together. They're durable enough to withstand taxation or creditors or other asset protection features, create some guidelines around distributing the assets to the next generation or other constituencies. But also have some flexibility to be able to deal with the things we can't look into the crystal ball and figure out over time.

.956)Now the problem, there's two problems. In my opinion, what I see is that, you know, your individual trustee by and large is Uncle Joe, right? He's the guy that everybody goes to in the family. The responsible one. He's the smart one. The wealthy one who, great, doesn't know what the fiduciary duties are. He doesn't know that he has a duty of impartiality. He doesn't know that…

.419)Right.

.475)He can't self deal unless the instrument says so. Doesn't understand how the instrument works. He doesn't understand the nuance and the legalese written into the instrument. But he's flying by the seat of his pants and everybody looks to him as the respected one in the family. No one knows that they have the ability to challenge him.

.061)Hmm.

.059)Of available educational programs to teach people the proper way to be able to understand trusteeship. It has always been, and it just has developed over time through, you know, oh, we'll give it to the bank, the bank will do it. This apprenticeship model, and that just does not scale well because if you learn improperly at the edge of a desk from somebody that learned improperly at the edge of the desk. Then the person that you're teaching now at the edge of the desk is learning what you learned improperly.

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Show notes

There is a storm coming with the challenges of navigating the TRUSTEE CRISIS. It is one of the biggest blind spots in the "GREAT WEALTH TRANSFER" and will be the source of mountains of litigation for the unwary,

https://youtu.be/hwQev88A03M

Summary

In this conversation, Frazer Rice and Jennifer Zelvin McCloskey discuss the current crisis in trusteeship, highlighting the shortage of qualified trustees amidst a significant wealth transfer. They explore the importance of modern trust planning, the challenges faced by individual trustees, and the need for better education and training in the field. The discussion also covers the emotional and interpersonal aspects of trusteeship, the functions and responsibilities of trustees, and the necessity of managing risk effectively. They emphasize the importance of building a pipeline for future trustees and improving the perception of the profession, while also identifying opportunities within the trust industry.

https://open.spotify.com/episode/4qpkrVdaUa2AfDxgl7j3yN?si=XVgG3jE_Qpqq2JTqi8XLXQ

Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

Takeaways

The coming crisis in trusteeship is already here.

There is a significant shortage of qualified trustees.

Trusteeship requires strong interpersonal skills and emotional intelligence.

Managing risk is a fundamental aspect of trusteeship.

Trustees critically need education and training.

The role of a trustee is evolving with increasing complexity.

Beneficiaries need to understand their rights and the trustee's role.

Custodial responsibilities are essential for asset protection.

There are many opportunities for growth in the trust industry.

Trust law and investment management are distinct fields.

This Episode is for . . .

Anyone that has an estate plan with a trust in it and doesn’t know what a trustee does

Any advisor who works w/ multi-generational situations (that's everybody in wealth management)

Any RIA looking to sell

Financial types worried about compliance world

Fiduciary litigators

Chapters of "THE TRUSTEE CRISIS: Navigating the Challenges"

Transcript of "THE TRUSTEE CRISIS: Navigating the Challenges"

Frazer Rice (

Jennifer Zelvin McCloskey (

Frazer Rice (

Jennifer Zelvin McCloskey (

Because there is this crisis of human capital that just does not exist. I built multiple programs. They're housed out of the University of Delaware. So I act as a trust and estate attorney, do planning, administration, I teach in the area, I build programs in the area, and I serve as a trustee.

PEAK TRUST MANAGEMENT CERTIFICATE

Frazer Rice (

Jennifer Zelvin McCloskey (

But if we don't do this type of planning, if we don't have structures and implementation for when we die, then our assets that we've planned so diligently for will fall off of a cliff. We lose the ability to control ultimately what happens to those assets.

Layered on top of that, of course, is the tax component for ultra high net worth folks who are trying to really focus and direct their assets to make and create generational wealth transfers.

Without this type of functionality and wealth planning and estate planning long-term, people lose control of what they've spent so much time building.

Frazer Rice (

And that those three things just putting a document together that tries to do all that is hard enough, but then to put it in the hands of somebody or something to administer and to exercise discretion around it. That's where the real art and science kind of stitched together and create this issue.

You know, as we think about that too, the idea, the history of these types of scenarios kind of goes back to, you know, you'd put a structure in place and then you'd go hire a bank and they'd take care of everything.

How do you look at that and say, all right, we've gone well past banks to individuals and then to dedicated institutions. What is the problem there?

Jennifer Zelvin McCloskey (

Frazer Rice (

Jennifer Zelvin McCloskey (

So with your individual run of the mill trustee named in the instrument, they just don't have the expertise, they don't have the technical knowledge. Don't know what they don't know. They can get into trouble in that way. The other problem that you have with professional individual trustees oftentimes is that they are not formally trained.

They may be an attorney who is working in that area, who's doing plans for people who may or may not know what the full scope of being a trustee is. They may not realize, I have to get a special insurance policy because my malpractice insurance policy doesn't actually cover this type of fiduciary engagement. There's a lot of landmines that individuals can run into when they're doing this type of work. On the corporate side, the problems that we run into is that there's just a complete and utter lack.

Frazer Rice (

Jennifer Zelvin McCloskey (

So anecdotally, I did karate for a long, long time. And the man who taught me karate, I'm almost a secondary black belt to like, was serious in karate. And the man who taught me karate said, you practice, it makes permanent. Don't practice wrong. Because when you're practicing wrong, you're making permanent wrong things.

And that's what the apprenticeship model has the risk of lending itself to. It's not that every trustee that learns at the edge of the desk learns wrong, but the risk is too high because the fiduciary responsibilities and the duties are too high to run that risk.

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