Is a corporate trustee the right choice for your estate planning needs?
Establishing a trust can help ensure that your assets are put to work according to your wishes, during your lifetime and after you’re gone. A trust can also help reduce estate taxes. When you establish a trust, you appoint a trustee – a person or entity that manages the assets within the trust for the benefit of your beneficiaries, which could be individuals, organizations, or both. Whether individual, corporate, or a combination, trustees are responsible for everything in the trust, including income and losses, and must act in the beneficiaries' best interests. While many people choose a family member to serve in this capacity, there are many circumstances where a corporate trustee may be beneficial for you, your heirs, and your estate.
Should you keep it in the family or choose a corporate trustee?
While keeping it in the family may seem like a good idea, the role of a trustee can be onerous and time consuming. That’s especially true for individuals who may not have experience managing finances and investments, real property, or taxes. That can lead to costly mistakes and significant delays, which can adversely impact your beneficiaries. And the more complex the estate, the more difficult it can be for trustees to juggle this fiduciary role on top of their own day-to-day responsibilities and commitments. That’s one of the many reasons individuals consider a corporate trustee.
It’s also important to consider how the role of the trustee may affect family dynamics. Trustees are often required to make tough decisions that might be unpopular with some of your beneficiaries. (Remember, the trustee is carrying out your instructions, not your beneficiaries’ wishes.) For a family member who may prefer acting in a manner that avoids hard feelings within the family, this can be a difficult role to fulfill, making a corporate trustee a practical alternative.
In addition, few family members have the level of expertise in investment management, taxes, and fiduciary law required to efficiently and effectively manage the various aspects of trust administration. Choosing a corporate trustee ensures access to all of the necessary skills and resources required to manage the trust in a timely, competent, and unbiased manner.
While a corporate trustee can help to head off potential family conflicts of interest and relieve family members of responsibilities that they may be unprepared to take on, keep in mind, the family can still appoint a family member to serve as a personal representative for communication and decision-making purposes.
7 benefits of a corporate trustee
Besides eliminating potential conflicts of interest between family members, implementing a corporate trustee has additional benefits for both the trust and its beneficiaries, including:1
- Unbiased loyalty and independence to carry out your wishes
- Knowledgeable management, protection, and defense of trust assets
- Experienced oversight of the investment process to be carried out by your financial advisor
- Timely and accurate statements of the account to keep you and all current beneficiaries informed
- Consistent account reviews
- Accountable collection and prudent distribution of income and assets
- Professional tax reporting, filing, and comprehensive regulatory compliance on behalf of the trust
Before choosing a corporate trustee, take time to meet with a qualified estate planning attorney and tax professional for advice specific to your situation and goals. For more information about corporate trustees, listen to my latest podcast episode of Frank Wealth Insights, featuring our special guest, Kate Shackleton, Executive Vice President, Trust and Insurance at LPL Financial.
At Return on Life® Wealth Partners, our team of wealth planning professionals can help you determine if choosing a corporate trustee is the right move for your estate planning needs and coordinate the advice you receive from all of your professional advisors. To learn how we can help you and your family pursue the Return on Life® you desire, contact us today for a free consultation.
About Return on Life® Wealth Partners
Return on Life Wealth Partners is an independent Registered Investment Advisor (RIA) founded in 1994, with headquarters in Cleveland. The team provides comprehensive wealth planning services to individuals, families, and business owners. By examining clients’ lives before their money, Return on Life® aligns its advice with clients’ values. With access to its Complete Family Office (CFO)SM and Personal CFO™ services, Return on Life® Wealth Partners aims to help clients achieve the milestones that matter most to them. This personalized approach also extends to the institutional and corporate retirement plan services available through 401(k) Prosperity®.
1“Why Consider a Corporate Trustee?” https://theprivatetrustcompany.com/family-individuals/why-consider-a-corporate-trustee/
This information is not intended to be a substitute for specific individualized tax or legal advice.
We suggest that you discuss your specific tax or legal issues with your qualified advisors.
The opinions expressed and material provided are for general information purposes only.
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