What is a Corporate Trustee?
By Jenny Ling, Esq.
When you create a Trust, you will appoint a Trustee – a person or entity who will manage your Trust – that is, buying and selling the assets of the Trust as well as distributing the assets to the beneficiaries of the Trust. When you create a Trust as part of your estate planning, you will serve as Trustee of that Trust. You will also name successor Trustees, to manage your Trust in the event of your incapacity and/or death.
It can be a difficult to select Successor Trustees for your Trust. You have to have a great deal of trust in those you select to manage your assets. We also recommend that you select more than one Successor Trustee. If you are unable to appoint family or friends, a good option for some families is the use of a Corporate Trustee.
Corporate Trustees
Your Trustee is responsible for buying and selling the assets of your Trust, filing tax returns, maintaining accurate records and distributing the income and assets of the Trust. A Corporate Trustee is a bank or trust company that is appointed to act in a fiduciary capacity to execute a Trust. Some of the benefits of a Corporate Trustee are:
Experienced. Corporate Trustees manage Trusts on a daily basis so they are familiar with different kinds of Trusts as well as many different kinds of investments.
Regulated. Corporate Trustees are regulated by the Department of Financial Institutions. Most courts consider them “experts” and expect them to meet higher standards than a nonprofessional.
Objective. Corporate Trustees are not friends or family members. They are positioned to weigh any requests impartially, without considering family politics or other emotional arguments.
The Trustee you select must follow the instructions you put in your Trust. Your Trustee can be held liable if they fail to follow your instructions.
Different kinds of Corporate Trustees
Most major banks and financial institutions offer corporate trustee services. There are also companies that provide trustee services as their main business. Different entities offer different services and price their services differently. Some entities charge by the hour or by the service. These can be good for smaller estates. Other entities charge a percentage of the overall estate, depending on the size of the estate, with a minimum annual fee.
How can I select a Corporate Trustee?
You should review the various Corporate Trustee services that are offered and determine with one is the best for you and your family. Although you will need to select a specific Corporate Trustee and name them in your Trust document, you do not need to sign a contract with the entity or pay them any money until their services are required. If you have named them as a 2nd or 3rd successor Trustee, their services may never be required.
Corporate Trustees can be a good option for many families. Whether you have a large estate or a small one, having an independent third party can help alleviate the stress for family members.
If you think a Corporate Trustee might be the a good option for your family, give our office a call to discuss.
Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC. She focuses her practices on estate planning, business succession planning, business and bankruptcy.
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