A trustee is one who holds legal title to property “in trust” for the benefit of another person, and who is required to carry out specific duties with regard to the property, or who has been given power affecting the disposition of property for another’s benefit.

A trustee is a fiduciary of the trust beneficiaries—meaning the trustee has a legal duty to act in the best interests of the beneficiaries, in accordance with the terms of the trust. Depending on the nature of your trust, the trustee may be required to perform a number of wide-ranging and complex duties, including:

• Investing and managing your trust’s assets
• Paying your bills if you are incapacitated or absent
• Making income and principal distributions to beneficiaries according to the terms of your trust agreement
• Maintaining detailed financial records and making periodic account and tax reports to beneficiaries
• Preparing and filing the trust’s income tax returns

It is common for someone who has established a trust to name themselves as trustee during their lifetimes. They often appoint their spouse, a friend, or family member as the successor trustee to assume the responsibility upon their incapacity or death.

However, naming a family member as trustee or successor trustee has the potential to create unexpected problems over time. Even financially sophisticated individuals can find administering and managing a trust to be a complex and difficult experience. It can also place family members at the center of disputes over the interpretation of the trust and how it should be managed.

Advantages of a Corporate Trustee
Appointing an impartial corporate trustee offers several important advantages:

Objectivity and Reliability
A family member may have emotional or personal ties to beneficiaries. A corporate trustee is regulated by state and federal agencies and will follow your instructions without many of the potential personal conflicts that a relative or friend is likely to face. Further, corporate trustees do not become ill, die, go on vacation, move away, or become distracted by personal concerns, and will be available to serve you and your beneficiaries over the long term.

Experience and Professionalism
Trust administration requires a thorough understanding of many regulations and procedures. These responsibilities can be overwhelming for a family member or other appointee, particularly during demanding periods in their lives. On the other hand, corporate trustees are in the business of managing trusts and estates and have the seasoned trust specialists and technology necessary to perform their trustee responsibilities. They also have experience with a wide variety of complex assets and access to professional investment managers who use sophisticated tools to establish an appropriate investment objective and manage the assets efficiently.

Control
Even when naming a corporate trustee to manage your trust, there are ways to keep your family involved, either by appointing a family member as co-trustee in conjunction with the corporate trustee, or granting your beneficiaries the power to remove and replace the corporate trustee at any time.

Is a Corporate Trustee Expensive?
A corporate trustee will only begin to charge a fee when they start to act on the individual’s behalf. Although an individual family member or friend rarely charges a fee to serve as trustee of your trust, there is a high likelihood that financial, legal, and other specialized professionals will need to be consulted during the life of your trust. These professional service fees are charged directly against the trust and can be considerable.

Evaluating a Corporate Trustee
Your Financial Advisor or estate planning professional can assist you in the process of evaluating corporate trustees. The following list of questions and considerations is a good place to start when deciding whom to appoint as your trustee.

Experience

• How long has the corporate trustee been in business, and how many years of experience do their professionals have in the trust business?
• What is the minimum size as well as the average size of the trusts they manage?
• How do their investment returns, fees, and services compare to other corporate trustees?

Service

• How much personal attention are you and your beneficiaries likely to receive?
• Does the trustee appear to care about you and your family, and do they listen and understand your concerns?
• Are their answers to your questions clear and concise?

Why Name a Corporate Trustee?
In summary, a corporate trustee brings three main benefits:

Ensure your trust is administered objectively and reliably
Unlike a relative or friend, a corporate trustee is regulated by state and federal agencies and will follow the instructions of your trust without emotional conflict of interest or the risk of becoming distracted or incapacitated.

Receive professional financial service
Corporate trustees have the knowledge, experience, and technology necessary to perform their responsibilities with expertise and care including all aspects of trust administration and management of the trust’s investments.

Maintain family control of your estate
When naming a corporate trustee you can still ensure family control by appointing a family member as co-trustee or giving your beneficiaries the power to remove and replace the corporate trustee at any time.

Getting Started
Enhancing your loved ones’ long-term financial security by establishing a trust requires careful planning. You need to consider your current needs as well as what you hope to accomplish with your wealth and the values you would like to pass along to future generations. When you name the right corporate trustee, you can feel assured that your financial affairs will be treated with the utmost respect and professionalism.

To learn how we can help you and your family manage your trust, contact a Wintrust Wealth Management professional.