Who can be a Trustee

[cpc0506]

New Client wants to to know if he can have a second Trustee for his plan, which of course he can. However, the client tells us that the person he wants to name has no relationship to the company and is not American.

Your thoughts?

[Peter Gulia]

If the plan is ERISA-governed and the appointer has discretion to appoint (or decline to appoint) the second trustee, a mainstream interpretation of ERISA's definition of a fiduciary and ERISA's standard of care is that the appointer must use no less care, skill, caution, and diligence than would be used by an experienced fiduciary making a similar appointment. (And if applying that standard too literally results in an illusory standard of care, a fiduciary must nonetheless perform according to a minimum degree of care that's fitting for a fiduciary.)

Without needing to focus on whether the candidate is a U.S. or non-U.S. person, a fiduciary should do at least a check for a crime that under section 411 would preclude the candidate's proper service. A more careful fiduciary might, in some circumstances, consider some further investigations into a candidate's honesty and reliability.

Also, an appointer might consider: Why is someone who has no relationship with the employer willing to serve?

[david rigby]

Is someone (the appointer) being sold something (the appointee)?