A Trust Is Only as Strong as Its Trustee: How to Choose Wisely in Nebraska
A Strong Trust Can Still Fail—If the Wrong Person Is in Charge
You can have the most carefully drafted, airtight trust document in place—and still end up with chaos if the wrong person is named trustee.
Why? Because a trust is only as strong as the person administering it. That’s not dramatic—it’s just reality. And in Nebraska, choosing your trustee is one of the most important decisions in the entire estate planning process.
Too often, people default to a name that feels familiar: “I’ll just pick my oldest child,” or “My sister is good with forms.” But a trustee isn’t an honorary title. It’s a legal role, and a demanding one.
What Does a Trustee Actually Do Under Nebraska Law?
In Nebraska, trustees are fiduciaries. That means they’re legally required to act in the best interests of the beneficiaries, manage the trust’s assets prudently, and follow the trust’s terms exactly as written. These responsibilities are governed by the Nebraska Uniform Trust Code (Neb. Rev. Stat. §§ 30-3801 to 30-38,110).
One of the trustee’s core duties is the Duty of Loyalty (Neb. Rev. Stat. § 30-3866). A trustee must avoid any conflicts of interest and act solely for the benefit of the trust’s beneficiaries. This isn’t about keeping the family happy or playing peacekeeper—it’s about upholding legal and financial obligations with care, skill, and neutrality.
Trustee Responsibilities: More Than Just Paperwork
Depending on the structure of the trust, the job may last for years—not just a few months after someone’s death. That’s why choosing someone with staying power and sound judgment matters so much.
Financial Oversight and the Prudent Investor Rule
A trustee doesn’t have to be a CPA or financial advisor, but they do need to manage money responsibly. Nebraska’s prudent investor rule (Neb. Rev. Stat. §§ 30-3883 to 30-3889) requires trustees to invest and manage trust assets as a prudent investor would—balancing risk and return, diversifying investments, and seeking professional advice when needed.
Neutrality and Family Dynamics
Being neutral isn’t optional. A trustee can’t favor one beneficiary over another or let personal feelings impact their decisions. If a potential trustee is likely to get caught up in old sibling rivalries, or is prone to taking sides, that’s a red flag. The law expects objectivity—and so do the courts.
Communication and Reporting
Nebraska law also requires trustees to keep qualified beneficiaries informed (Neb. Rev. Stat. § 30-3878). That includes:
Notifying beneficiaries when the trustee accepts the role
Providing copies of the trust upon request
Sending annual financial reports, including trust income, assets, liabilities, and expenses
This is not just a best practice—it’s a legal requirement.
A qualified beneficiary includes people currently receiving distributions, as well as those who would receive them if the current beneficiaries’ interests ended. This ensures that those with a real, near-term interest in the trust are kept in the loop.
Exercising Good Judgment
Life throws curveballs. A trust can’t account for every possible future event. A strong trustee understands when to strictly follow the document, when to ask questions, and when to call in legal or financial support. Nebraska’s “prudent administration” standard (Neb. Rev. Stat. § 30-3867) makes this judgment a legal expectation—not just a personality trait.
Do Trustees Need a Bond?
Sometimes. If the trust requires it—or if a court orders it—a trustee may need to secure a bond, which protects the beneficiaries in case of mismanagement or fraud. This is another reason many people turn to professional trustees for complex or high-value trusts: they’re usually bonded and regulated.
Can a Family Member Be Trustee?
Absolutely. But it’s not always the best option. Sometimes, the smartest move is to name a professional trustee, or to pair a trusted family member with a co-trustee who brings legal or financial expertise. That way, you maintain personal involvement while adding structure, neutrality, and oversight.
And let’s not forget—the trust document itself matters. Even the best trustee can’t do a good job with a poorly written or confusing trust. The document needs to be clear, specific, and tailored to your situation.
Trustee Selection Isn’t About Favoritism. It’s Strategy.
This isn’t about who deserves it, who’s closest to you, or whose feelings will be hurt. It’s about whether the person you’re naming can carry out your wishes in a way that’s legally sound, financially responsible, and emotionally steady.
A good trustee protects your legacy. A poor one—no matter how well-meaning—can lead to confusion, resentment, or even litigation.
If you’re creating a trust in Nebraska, take the time to think this through. And if you need guidance, I’m here to help.
FAQ: Trustees and Nebraska Estate Planning
What is a trustee?
A trustee is the person (or institution) named to manage assets placed in a trust. They are legally obligated to follow the terms of the trust and act in the best interests of the beneficiaries.
What does a trustee do in Nebraska?
Trustees in Nebraska manage trust assets, communicate with beneficiaries, follow investment rules (like the prudent investor rule), and provide required financial reporting. Their role is governed by the Nebraska Uniform Trust Code.
Can I name a family member as trustee?
Yes—but make sure they’re capable, neutral, and financially responsible. It’s often helpful to work with an attorney to assess whether a family member is the right fit or whether a co-trustee or professional trustee might make more sense.
What happens if the trustee fails to act properly?
Beneficiaries can take legal action. A trustee who breaches their fiduciary duties may be removed by the court and held personally liable for financial losses or mismanagement.
What is the Duty of Loyalty?
The Duty of Loyalty means a trustee must act solely in the best interests of the trust’s beneficiaries and avoid personal conflicts of interest. This is a foundational legal standard for trustee conduct in Nebraska.
Need Help Choosing a Trustee or Creating a Nebraska Trust?
I help clients throughout Nebraska draft strong, clear trust documents and select trustees who can carry out their wishes effectively. If you’re not sure who to name—or whether your current plan is solid—let’s talk.
Call 402-259-0059 or email zach@zandersonlaw.com to set up a consultation.