Five Reasons To Appoint a Professional Trustee
One part of devising an effective estate plan is deciding who is best to serve as trustee. Some people are confident in family members or other personal acquaintances and prefer they serve if able. Others prefer having a professional/corporate trustee serve.
Here are five reasons to name a professional/corporate trustee in your estate plan.
- Experience and Expertise. Administering a trust can involve a broad range of specialized activities. Engaging a professional with experience and expertise in trust administration will help ensure your wealth is preserved and utilized to benefit your family in the manner you desire. Below are some of the specialized activities a trustee commonly perform:
- Follow the terms of the trust instrument and all applicable trust laws.
- Implement/execute prudent investment strategies.
- File trust tax returns and understand the tax implications of investments and distributions.
- Manage closely-held business interests, real estate and other liquid assets.
- Balance the needs/desires of multiple beneficiaries with conflicting interests.
- Effectively manage/communicate the expectations of beneficiaries facing difficult circumstances.
- A professional/corporate trustee is more likely than a family member or acquaintance to be unbiased and capable of being objective when making decisions.
- Financial institutions with trust assets under management are highly regulated and have operational and reporting controls built into their asset-management platforms. Their activities are usually subject to periodic audits by state banking authorities. It is far more likely an individual with little or no oversight would steal or misappropriate trust assets than a professional/corporate trustee subject to rigorous internal and external oversight.
- Trusts can last for many generations. Unlike an individual, a corporate trustee doesn’t die, become incapacitated or take extended vacations.
- Administering a trust properly is a time consuming job. A professional/corporate trustee concentrates all its efforts on trust administration. A professional/corporate trustee also keeps regular business hours and may be more accessible than a working family member to answer questions from and meet with beneficiaries.
Each family situation is unique. Determining whether an individual or professional is best suited to serve as trustee in your estate plan depends on a variety of factors. In many situations, however, there are clear advantages to entrusting a professional to serve as trustee instead of burdening a family member or friend with the job.