As you plan for your own and your family’s financial future, you may be considering the creation of a trust. If you decide a trust is needed, either during your lifetime or in your will, you will have to choose a trustee to administer it. A trust is a legal arrangement that transfers property to a trustee, who manages it for the benefit of the individuals you name. The law sets high standards that every trustee must meet. You can choose almost anyone to serve as your trustee– a family member, a friend, an accountant, or an attorney. In many cases the best option is a corporate fiduciary. Naming a corporate fiduciary alone or jointly with a family member has several advantages for your beneficiaries, namely continuity and stability.
Stability is important because a trust may extend over many years and into a second generation of beneficiaries. You can expect a corporate fiduciary to continue to serve your family during the trust’s entire term. But the lifespan and health of an individual trustee are always uncertain–a factor you will want to take into consideration when you select a trustee and a successor trustee to take over if, for some reason, your original trustee cannot continue to serve.
More Advantages of a Corporate Trustee
Unfortunately, family members may not be able to devote the necessary attention or time to handling what is a fairly complex undertaking. Even smart friends or business associates are unlikely to have the expertise required to serve as a capable trustee. Mistakes made in the administration of the trust may result in needless expense and cost you, your estate, and/or your beneficiary(ies) valuable assets. And unlike friends and family members, a corporate trustee won’t move away, fall ill, or lose interest in overseeing your trust. If you feel more comfortable having someone close to you involved in managing your trust’s assets, consider naming a friend or family member as co-trustee of your trust. With this approach, you’ll have the perspective and family connection of an individual trustee as well as the professional experience and skills of a corporate trustee. Take your time before naming a trustee of your trust. Your CCM advisor would be happy to provide more details about the potential benefits of choosing an institutional trustee.