Trustee Management & Planning Services
What does a trustee do?
A trustee is a fiduciary who is tasked with managing the assets placed into a trust.
Most often, people choose trustees from within their family or trusted friends, this is known as an individual trustee.
However, given the complexity involved in being a trustee, there may be times when it makes sense to consider a corporate trustee. Another option is to have a corporate trustee serve as a co-trustee, working alongside the person chosen on the family side.
Why Use a Corporate Trustee?
The trustee can sometimes put families or friends into roles where they may not be comfortable. Often, the trustee and beneficiaries are likely to be family members. In these cases, there is a potential for conflict between the trustee and beneficiaries, and even among the beneficiaries, where the trustee will need to get involved. Sometimes, a trustee is also a beneficiary, which would pose a conflict of interest. A corporate trustee offers impartial and independent advice that keeps your decisions front and center.*
Most trusts are set up to last generations. If a trustee is unable to continue managing the trust (usually due to incapacity or death), a successor trustee would step in, and that can cause interruptions and new conflicts to surface.
A trustee’s duties begin after the grantor, the person who created the trust, dies. If the trustee is a family member or friend, he/she is dealing with grief and the emotions that come with it, while trying to fulfill the duties of a trustee.
Often, a trustee will need to balance the needs of the current beneficiaries with those of future beneficiaries. Let’s say a beneficiary asks for a distribution (wants to fund a new business) that will impact what’s left for future beneficiaries. A corporate trustee can help remove the drama, tension, and emotions that inevitably show up in situations like these.
Sample Scenarios that May Benefit from a Corporate Trustee
We often hear from our clients who select our corporate trustee services that they want to ensure family harmony and their children’s welfare after they are gone.
Examples of families who would benefit from corporate trustee services:
- My daughter has a solid career and is very savvy in managing her wealth, but my son is not. If we appoint my daughter as our trustee, our son will resent that he needs to ask his sister for funds. I want to outsource this to an objective third party and avoid creating an ongoing family conflict.
- Our child has special needs, and I want to ensure he will get the right care in the event my husband and I are gone. We don’t want a big bank that we don’t know to manage the estate. We want someone who can work with our advisor who has known the family for years.
Why Choosing the Right Trustee is Critical
Serving as a trustee can be a time-intensive process that requires specialized knowledge, expertise, discretion, good judgement, and resources. A trustee has many responsibilities. Here are just a few that place a burden on trustees who are not corporate trustee professionals:
Trust documents contain a lot of legal language. This means that unless the trustee is a lawyer by trade, they will need to spend extra time trying to figure out the next steps and what they need to do.
The assets may range from investment and real estate to works of art, which means if they are not familiar with these types of assets, they’ll need to spend time learning.
Beneficiaries include any person or entity that will receive a benefit from the trust. A trustee must have undivided loyalty to all beneficiaries (no playing favorites). This means that sometimes a trustee may have to make judgement calls when interpreting the trust language and determining what is in the best interest for beneficiaries.
If they’re not knowledgeable about investments or taxes, they’ll need to learn about both topics, because as a trustee, they’ll be doing a lot of heavy lifting.
*Corporate trustee services are offered through National Advisors Trust Company, the largest federally chartered trust company created by registered investment advisors for the benefit of their clients.