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Corporate Trustee Versus a Family Member

It is not unusual for most of us when creating our estate plan to consider naming a friend or relative with a background in finance or law to be the Successor Trustee for our trust, but there is an important alternative worth consideration.

When it comes to naming a fiduciary to step into your shoes at the appropriate time to execute your estate plan you have two choices.  A corporate trustee will have a very different approach to managing a trust.  Because, in all likelihood, they will have no previous relationship with your family members, a corporate trustee can maintain a more objective relationship, and depending on your situation, may be a far better choice than a family member or a friend. They’ll bring sound investment management skills and knowledge, minus the distractions of emotions.

One of the many benefits of appointing a corporate trustee, is that they are held to a fiduciary standard of care when managing a trust investment portfolio. That means that they’re legally required to place their client’s interests above their own when making investment decisions. While this may seem like a no-brainer, it’s not the rule for all financial professionals.

While an individual trustee is held to the very same fiduciary standard of care, they often have little if any knowledge or understanding of trusts, investing and estate planning and that can put the plan at risk.

There are a few factors when appointing trustee regardless of whether that trustee is a family member, a friend or a corporate trustee and that is that the trustee should employ an investment professional and not self manage the trust assets.  In fact, this is often a corporate mandate with many of the investment companies that offer trustee services a part of these business portfolio.

Everyone’s circumstances change, and developing a close relationship with the chosen trustee, and keeping the trustee up-to-date about important events and happenings will help ensure the trust is able to support the beneficiaries in a time of need, while still being able to accomplish long-term goals.

Before you select a corporate trustee, conduct in-depth research on the bank or trust company. Understand their fee structure while getting a clear picture of how the organization works and whether or not you and your heirs will be comfortable with the institution. Don’t make the mistake of choosing your corporate trustee based solely on an employee of that company; that person may have retired or left the company before you need the services of a successor trustee.

ReferenceDallas Business Journal (September 24, 2018) “Fiduciary investment management and corporate trustees”

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The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.