Does Your Estate Plan Need a Corporate Trustee?

Many estate plans utilize what is called a revocable living trust. During your life, you generally serve as Trustee of your revocable living trust and can either retitle your assets in the name of the trust during your life or you can use a “pour-over will” to direct your Personal Representative or Executor to transfer any individually owned assets at your passing to your trust. After you pass, your trust becomes a separate entity that owns property managed by a trustee, who then administers the trust per your instructions for the benefit of the designated individuals or charities.

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. You may be thinking your estate plan is not complex, so a family member or friend should be able to handle your affairs after you pass.

It seems reasonable. However, family members may not be able to devote the necessary attention or time to handle this 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, which could impact the value of your estate and the assets your beneficiaries inherit. 

Why should you consider a corporate trustee? Here are five reasons. 

  1. Extensive Investment Management and Trust Administration Experience
    A corporate trustee does this for a living. Lack of experience isn't likely to be a problem.
     
  2. Knowledge of Applicable State Laws and Procedures
    Unless the friend or family member you've named as trustee has served in the role before, he or she probably won't be familiar with the laws governing the administration of your trust or the procedures required to keep your trust in good standing. 
     
  3. Long-Term Stability
    Unlike friends and family members, a corporate trustee won’t move away, fall ill, or lose interest in overseeing your trust.
     
  4. Neutrality and Impartiality
    Your trustee will be called upon to make careful decisions that are in the best interests of your beneficiaries. A corporate trustee is an impartial third party that will make decisions objectively and in accordance with the laws of your particular state.
     
  5. Co-Trustee Arrangements
    If  the thought of having a stranger managing your assets makes you uncomfortable, 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 a corporate trustee’s professional experience and skills.

If you have questions about trusts, trust administration, or estate planning, Takacs McGinnis can help. Just give our office a call at 615.824.2571.

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