Why You Might Want to Consider a Corporate or Private Trustee

In my last article I discussed some of the factors to consider when choosing a trustee for your irrevocable trust. Now I’d like to elaborate on two options you might want to consider if you don’t know anyone you’d trust to fill this crucial role: a corporate trustee and a private trustee.

A corporate trustee is a bank or specialized company that manages a trust in the best interests of the grantor (the person whose assets are in the trust).

A private trustee is a local attorney who acts as trustee.

Advantages of these approaches include:

A corporate or private trustee is unbiased. This will help eliminate infighting between family members over who should serve as trustee and how the trust should be managed.

Experience. A corporate or private trustee will generally have far more experience managing and administering trusts than a family member or close friend.

Finally, if you are unhappy about how trust assets are being managed, it is considerably easier to fire a corporate or private trustee than, for example, your son or daughter.

If it sounds like a corporate or private trustee might be a good option in your situation, be sure to ask potential candidates all of the following questions:

  • What does the service cost and what is included in the fee?
  • How long has the trustee been in business?
  • How many trusts has the trustee managed?
  • How many assets are held in trusts typically managed by the trustee?

Differences between corporate and private trustees:

An array of services. Many corporate trustees provide additional financial services beyond trust administration. Taking advantage of these services might be a sound investment. A private trustee will limit services to managing the trust.

Cost. A private trustee is generally less expensive than investment houses that charge on a percentage basis.

Cash minimums. All corporate trustees have required cash minimums in order to serve as trustee (the amount varies widely by bank).  A private trustee does not have a minimum.

Real estate. Only a few corporate trustees will take on real estate.  A private trustee often will.

Oversight and backup. Corporate trustees are subject to a host of strict regulations and oversight.  Also, being part of a larger office, your corporate trustee will always have another staff member to take over your trust if needed.  A private trustee also has regulations and backup, but to a much lesser extent.

As always, I am here to help you any and every way I can. I also welcome the opportunity to counsel you on your choice of trustee.

Until next time, take care…