When Would It Be Wise to Use a Corporate Trustee?

Corporate trustee
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A corporate trustee can benefit the management of a trust.

Some tasks can be easily delegated to family and friends.

Need groceries from the store?

Send your child who can drive.

Need plumbing in your bathroom fixed?

Perhaps you should evaluate whether anyone has the appropriate skills.

According to a recent The Quad Cities Times article titled “Benefits of a corporate trustee,” some people may have family or friends who are capable of serving as a trustee while others may benefit from a corporate trustee.

A corporate trustee is has a fiduciary duty.
A corporate trustee brings experience and knowledge to administration and management of a trust.

Although the first step in setting up a revocable living trust is to work with an experienced estate planning attorney, choosing the right trustee is also vital.

Most people choose to designate themselves as the primary trustee while they are alive.

These individuals also require a successor trustee.

What is a successor trustee?

A successor trustee manages the trust and its assets according to the instructions provided when the primary trustee dies or becomes incapacitated.

Although you could choose a friend or family member over a corporate trustee, you should carefully consider whether this could lead to issues.

Does the individual you would appoint possess the time, responsibility, and organization the job demands?

If no, then you may be setting them up for failure or worse.

Would naming this individual lead to friction within your family?

If you have concerns, you may want to consider a corporate trustee.

In what ways might a corporate trustee benefit you?

Experience and Dedication.

Although a personal friend or relative may have every intention of serving diligently as a trustee, this person may find themselves overwhelmed by the duties.

A corporate trustee will have the resources, experience, and knowledge of laws, taxes, and investments to confidently fulfill the responsibilities.

You can hire a corporate trustee as an administrative trustee or an investment manager.

An administrative trustee will oversee the operations of the trust.

An investment manager will be in charge of the invested assets.

Although you could divide these roles, you can also secure the services of a corporate trustee for both roles.

Consider the corporate trustee as the “all-included buffet” instead of the a’ la carte approach.

Regulation and Protection.

Because the work of corporate trustees is regulated by federal and state laws, you may find yourself more confident in the protection this provides.

Both registered investment advisors and corporate trustees have a fiduciary responsibility to act in the best interested of the beneficiaries of the trust.

Successor Trustee.

Should you choose to designate a personal trustee, you may also decide to designate a corporate trustee specifically as the successor trustee or even as co-trustee.

This can be helpful should the individual you selected be unable or unwilling to serve.

Because a corporate trustee does not die or become disabled, you can extend the longevity of your trust management.

When selecting a corporate trustee, review the types of assets held in the trust and ensure the trustee is capable of managing these assets.

For example, if you trust will hold agricultural assets, then make sure the corporate trustee has experience with all of the intricacies of farming and ranching.

Work with an experienced estate planning attorney when creating or making changes to your revocable living trust.

Reference: Quad Cities Times (Nov. 28, 2021) “Benefits of a corporate trustee”

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