Anyone who is considering setting up a trust must be prudent in their selection of who is to act as a trustee.

Once the document creating the trust has been executed, and the initial trust fund transferred to or under the control of the trustees, you as settlor no longer have any control over your hard-earned assets.

Consequently, it is extremely important that you choose respected and trusted individuals, such as a relative, friend or advisor, to be trustees.

Alternatively, you may appoint a professional such as a trust company, which must be licensed if it offers services to the public, to fill this role.

Some people prefer to appoint individuals because of the personal involvement this will bring to the administration of the trust.

They might also do so in order to avoid the fees that a professional will charge, since a lay trustee is generally not entitled to compensation.

But even if such a choice is based upon a personal friendship, you as settlor must consider whether the person you appoint as a trustee is competent to properly administer a trust. The position as, and responsibility of, trustees should not be taken lightly.

Once they are appointed the law places trustees in a "fiduciary'' position.

This means that in relation to the trust they must act in good faith for the sole benefit of the beneficiaries.

Trustees acting in their own interest at the expense of that of the beneficiaries will be guilty of an abuse of power and consequently be personally liable to account to the beneficiaries for such acts.

The trustees will generally be required to maintain trust accounts and accurate records of all transactions affecting the trust. This will include documenting all additions to and distributions from the trust.

Trustees must also prudently invest the trust assets exercising reasonable care, skill and caution. A trustee cannot sit idly by and allow the trust fund to depreciate and is liable for any deliberate, reckless and negligent breach of his duties to the trust and its beneficiaries.

Trustees will often delegate some of their responsibilities by appointing an investment advisor or an accountant.

Although such appointment will remove some of the immediate pressure, the law requires trustees to exercise reasonable care, skill and caution in any such delegation. A failure to do so results in personal liability for the trustee.

For all of the reasons outlined above, many settlors appoint a professional trustee.

A trust company that is appointed as a trustee will provide an impartial service and, being a corporate entity, will not suffer from death, illness or mental incapacity.

As settlor, you may even appoint yourself as a trustee.

Such an appointment would allow you to retain an involvement in, and influence over, the administration of the trust assets.

But as a trustee, you must be sure not to allow your personal wishes to overshadow your duties as trustee.

As settlor you may, alternatively, seek to retain some limited control by becoming the protector of the trust, whose duty is to ensure that the trustees act in the best interest of the beneficiaries.

Rather than being appointed as a trustee or protector, you may prefer to exercise some influence over the trustees through the use of a letter of wishes addressed to the trustees.

Although this document does not affect the absolute discretion of the trustees, by setting out your wishes regarding the administration of the trust, including the distribution of the trust assets, your hope is that the trustees will have some regard to those intentions.

Even a beneficiary of the trust may be appointed as a trustee. However, this may result in a conflict of interest between the individual's position as a trustee and as a beneficiary.

While there is no limit to the number of trustees who can be appointed, the appointment of two trustees is the most desirable.

Any more than four trustees can cause the trust administration to be unnecessarily cumbersome.

Appointing a professional person or trust company to be a trustee together with a trusted individual may be a sensible approach.

Deciding to relinquish immediate control over your assets by placing them in trust is in itself a daunting task.

The choice of individuals and/or a corporate entity to properly manage and administer property can be equally as formidable.

The key to a successful choice is to seek proper legal guidance and to consider all available options.

*** Attorney K. Renee Benjamin is a member of the Trusts and Financial Structures Team of Appleby Spurling & Kempe. Copies of Ms Benjamin's columns can be obtained on the Appleby Spurling & Kempe website at www.ask.bm.

*** This column should not be used as a substitute for professional legal advice.

Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.