How Do I Know Which Way to Go?
Families often desire to leave money in trust for future generations. A trust can provide safety and security that the money will go as the wealth creator directs. Aside from the actual decision on how wealth is to be divided, whom you select as a trustee can be an equally daunting task. Do you choose an individual? Or a corporate trustee? Or perhaps a combination of both? Each has its advantages. I wanted to take a few moments and share with you some reasons to consider a corporate trustee.
A corporate trustee has a duty to be objective. That means that they must weigh each decision fairly for all beneficiaries (current and remainder). A corporate trustee is impartial. A corporate trustee does not have to worry about how people will act at Thanksgiving Dinner if a distribution request is denied. Moreover, unlike an individual, it is not just one person making the decision. A corporate trustee typically makes a decision by a committee vote.
A corporate trustee is heavily regulated. There are both internal and external audits that ensure all trusts are handled properly. Additionally, the trust team is responsible for an annual review of the relationship to ensure everything is being handled prudently.
The decision to be insured is one that few individual trustees purchase. A corporate trustee is insured against any wrongdoing by the company. This provides protection for the beneficiaries and remainder beneficiaries that the trust will be managed properly and there is a mechanism for recourse should something go awry.
With a corporate trustee you are being assigned a trust team that ensures someone will always be available for the client. Individuals take vacations. A corporate trustee ensures that relationships are managed when the primary contact is out of the office. Also, a corporate trustee is knowledgeable of the laws that govern the trust.
Much thought should go into the selection of the proper trustee. Also, the grantor should ensure there is an exit plan for the trustee should the relationship, as it transfers generations, changes and is not what the grantor originally intended.
For First State Trust Company, we have clients in various trust roles (co-trustee, beneficiary, remainder beneficiary, attorney, CPA, etc.) that have indicated they would be a resource for any potential client should they want to get a feel for how it is to work with us. You should ask a potential trust company if they have a client/attorney/CPA list of contacts they can reach out to. Our goal is to be flexible and understanding and caring and taking the role of a trustee as a privilege while at the same time balancing the directions within the four corners of the document.
Make sure you spend time interviewing the various trustee options you have and make certain you are leaving your family in good hands.
For more information, please contact:
Jacqueline Jenkins, CTFA
Chief Fiduciary Officer / Managing Director
Phone: 561-515-6156 / Email: firstname.lastname@example.org
The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only.