The decision to entrust a family member or friend with assets intended for the benefit of a loved one can be quite difficult. Even more challenging is the choice of a corporate trustee, a corporation formed for the purpose of exercising trust powers. But for sizeable trusts which may require significant effort to manage or for families concerned about finding an individual trustee with sufficient experience to handle the responsibility, a corporate trustee is often the appropriate choice.
Role of a Corporate Trustee
A corporate trustee, much like an individual trustee, is given the power to administer the trust and make distributions and financial decisions affecting the assets held by that trust. The corporation will be represented by a trust officer assigned to your family’s trust. Most importantly, this trust officer must understand and fully comprehend the language of the trust document, as well as the intent of the parties who have established the trust. His or her responsibilities will consist of investing assets, developing tax strategies, maintaining an inventory of the trust property, providing account statements, reporting income and filing tax returns, payment of bills and debts owed by the trust, and maintaining thorough records.
One advantage of choosing a corporate trustee over a family member or friend lies in avoiding conflicts of interest. Family or friends may certainly be the appropriate choice in making decisions in the care of a minor child or disabled or incapacitated adult, but this same individual may be an inappropriate fiduciary representative. Engaging a corporate trustee allows for an independent third party to make pertinent decisions regarding the preservation and distribution of assets intended for use in caring for your loved one, while leaving the day-to-day care decisions to those closest to the family.
Essential Attributes of a Corporate Trustee
Selecting the proper corporate trustee is key in assuring both financial security and peace of mind. Families should look for a corporate trustee and trust officer who will provide careful management of resources, exercising the appropriate level of diligence. Acting as trustee is a fiduciary responsibility that comes with potential ramifications in terms of family dynamics and stability in the life of the beneficiary; therefore, training and a wealth of experience are essential. The trustee must have the ability to put the interests of the beneficiary first and be responsive to that beneficiary’s needs. Above all, the trust officer should take the time to get to know you and your family, the financial situation you are facing, and be able to identify goals of the trust for the future.
How To Choose A Trustee
In order to select the right corporate trustee, you must be willing to ask difficult and pressing questions. Does this trust officer possess the ability to make decisions based only on the best interests of the beneficiary? Can he or she treat all beneficiaries equitably, taking into consideration their individual needs and financial positions? Sufficient training and experience are essential, so be sure to ask about the history of the corporation as well as about the individual education and experience of the trust officer. In the event that the trust officer will be unable to serve as trustee for the life of the trust, you will also want to know who will step in to take that officer’s place. The corporation should equip its trust officers with the proper resources to manage money, monitor investments, and balance risks. Finally, the trust officer should provide assurance that he or she will be responsive to the concerns of you and your family in the event that circumstances should change or questions should arise.
The decision to elect for a corporate trustee can be, to say the least, taxing on any family. But above all, you and your loved ones must feel comfortable with the company and individual charged with handling the hard-earned assets intended to provide for your futures. No matter the size of the trust or the dynamics of the family, the trustee should be able to make objective, equitable decisions based on experience and an intense sense of responsibility.