When creating a trust, an individual or a corporate entity are two basic choices for a trustee. In our last article, we addressed the individual trustee and factors to consider.
There are three basic types of corporate trustees:
- Bank Trust Departments. These corporations are the traditional full-service corporate trustee with fee schedules for their services.
- Brokerage Firm Trust Departments. Most major national brokerage firms have in-house trust departments that combine the continued relationship with the family’s selected broker with the professional fiduciary personnel of the brokerage firm’s trust department.
- Private Regulated Trust Companies. These companies are incorporated to help people manage their money. They are fully regulated by either federal or state bank regulatory agencies.
Corporate trustees are appealing to many because they provide the following:
- Experience. Know how to manage a trust and how to deal with difficult and unusual situations.
- Investment expertise. In the business of providing investment expertise.
- Unbiased approach. Is not a beneficiary and does not have that inherent conflict of interest. This may help maintain family harmony and bring a consensus into a family unit with otherwise differing views, since it is not a family party.
- Permanent existence. A corporate trustee does not die and may be a good choice when a trust is planned to continue for many years.
A corporate trustee brings professionalism and staff that knows the responsibilities (and liabilities) of being a trustee. Most corporate trustees charge a fee of approximately 1% to 1.5% per year on the value of the assets under management, and additional fees may apply depending on the services rendered. However, the fees associated with utilizing a corporate trustee can be comparatively inexpensive if utilization of the corporate trustee prevents family discord and avoids litigation.
Please call 435-674-9718 and ask for Thomas J.Bayles. The information in this article is for educational purposes only and is not intended to be construed as legal advice.