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Worth Consideration: Corporate Trustees

A trustee of a trust must carry out the terms of the trust and safeguard trust assets for the beneficiaries’ benefit. A trustee can be one person, multiple people, or a corporate trustee such as a bank trust department or trust company with employees who help manage and grow the trust assets.  Whether or not you should appoint a corporate trustee depends on various factors including the type of trust you are establishing, the complexity of administration (including tax concerns), and family dynamics. Here are some general reasons why a corporate trustee is worth considering:

  • A Practical Trustee Choice
    A corporate trustee or co-trustee is a practical choice if you are elderly and have no one you can trust to take care of your financial affairs, have no children or other trusted relatives capable of serving as trustee (or you don’t want to burden them), or live far away from the person you would otherwise name as trustee.
  • Avoiding Arguments
    If you worry your estate plan may cause hostility among beneficiaries and family members, appointing a corporate trustee as trustee or co-trustee may be wise since a corporate trustee can be an unbiased trustee removed from family drama.
  • Experience
    Corporate trustees generally have more experience in managing trust assets then most individual trustees and, unlike family and friends who have their own busy lives, manage trusts professionally! Further, corporate trustees are motivated to help your assets grow and may be a better choice than an inexperienced or reckless relative.
  • Corporate Trustee as Co-Trustee
    One option is having a relative or corporate trustee work as co-trustees. This gives you the professional benefits of a corporate trustee and personal involvement of someone you know and love.
  • Keep Control
    Many people fear they will lose control if they appoint a corporate trustee. However, if the trust is properly drafted, you or your beneficiaries can change your corporate trustee at any time if you or they are unsatisfied.
  • Held to a Professional Standard
    A trust is a legally binding document. Although an individual trustee can be sued and removed by a court, a corporate trustee has a professional duty to follow the terms of your trust during your lifetime and after your death.
  • Bundled Services, One Fee
    Corporate trustees do charge a fee for their services. You will want to establish what fees a corporate trustee charges before engaging a corporate trustee. However, many corporate trustees include investment management, tax planning, and tax preparation services in their fees. Depending on the size and complexity of your trust, paying a corporate trustee may be well worth it.
  • Security of Assets
    Trust assets managed by a corporate trustee are fairly secure because corporate trustees are required to keep trust assets separate from all other bank or company assets and guarantee assets against fraud and theft. Trust assets cannot be loaned out by the bank, mixed with the corporate trustee’s own assets, or used to satisfy institutional creditors.

Questions to Ask A Potential Corporate Trustee:

If you can, talk to several corporate trustee candidates before selecting one. Ask the following questions:

  • How long has the trust department been in business?
  • How many trusts do they manage?
  • What is the minimum and average size of the trusts they manage?
  • How much experience does the trust department employees have managing trusts?
  • What are their fees for trust management? What services are included?

Remember, a corporate trustee is not right for everyone. If your trust is fairly simple, you may be fine being your own trustee or having a family member or friend you trust step in for you when you can no longer manage your own affairs. However, if your estate is more complicated or you doubt your relatives’ capabilities or intentions, you may wish to consult with Kirsten Howe and consider whether appointing a corporate trustee as trustee, co-trustee, or investment advisor is appropriate

2890 N. Main Street, Suite 206
Walnut Creek, CA 94597

925.943.2740

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