When establishing a trust, selecting the right trustee is critical. Some estate planning documents name an individual to serve in that capacity. All too often, it’s not the right choice.
Typically, this person is a family member who works full time and has no experience in trust administration, investment management, taxes, conflict resolution, or other fiduciary matters. The appointment often creates discord within a family, and the newly-minted trustee soon discovers that a burden, rather than an honor, has been conferred upon him or her.
So…the creator of the trust might want to consider naming a professional trustee such as a bank or trust company. Here are a few reasons why:
Impartiality/Objectivity: A corporate trustee is a neutral party, therefore not vulnerable to the tugs of emotion and family dynamics. The end results are better decisions and improved family harmony.
Expertise: A corporate trustee is an organization that employs professionals with broad experience and deep knowledge, including but not limited to investment management expertise and a thorough understanding of legal and regulatory requirements.
Continuity: A trust may need to exist for many years; however, individual trustees age, become ill, die, or move away. These factors may prevent an individual from properly executing his or her fiduciary duties and responsibilities. A corporate trustee is more permanent; therefore, it offers stability and uniformity of service…from one generation to another.
Team Approach: Modern trust departments typically employee several trust officers and other support staff. If your family’s trust officer is ill, on vacation, or out of the office for any other reason, a team of qualified professionals is still available to assist with any need.
Cost: Contrary to popular belief, it is generally far more cost effective to use a corporate trustee. Remember, an individual trustee typically hires multiple professionals to handle investment management, tax preparation, legal advice, and so forth. The end result is often…much greater expense.
Think of the trustee choice as a wise and loving decision for your family. What’s the right choice for your family?