Trusted Trustees

Tab 1

June 11, 2015

When setting up a trust, many estate owners believe they should choose a family member or trusted close associate as the trustee, assuming that person will make the best choices for their estate and its beneficiaries. In reality, many individuals don’t have the time or skills necessary to do the job effectively.


“Being a trustee is a time-consuming and complex task,” says Sally Mullen, Chief Fiduciary Officer for The Private Client Reserve. Trustees are charged with overseeing all administrative and legal tasks related to the trust, including filing tax returns if appropriate, dealing with court procedures, developing an investment strategy with consideration of the current and future needs of beneficiaries, ensuring statements are delivered to beneficiaries on a regular basis and accounting for all income and other investment earnings. It requires a lot of time and effort on the part of trustees and may push them beyond their capabilities.

This can be frustrating for the person put in that position, and it can compromise the value of the estate, she says. Mullen has seen many examples of families and friends inadvertently squandering a trust’s assets because they didn’t understand the long-term implications of their choices. For example, she recently had a client whose daughter secured power of attorney when the woman became incapacitated.

Tab 2

June 11, 2015

The daughter took over her mother’s revocable trust and quickly diminished its assets, Mullen says. “It wasn’t malicious, but her behavior displayed a lack of understanding of the terms of the trust,” she says. 


Unfortunately, there was nothing Mullen’s team could do to protect the estate because the daughter was named as its trustee.


“These are always sad stories,” Mullen says. But they don’t have to be.


Whom to Trust

Instead of putting loved ones in charge of administering a trust, many individuals choose to appoint a corporate fiduciary as their trustee. In these cases, wealth management and trust professionals take full responsibility for overseeing distribution of the assets, as well as managing all of the regulatory, administrative, legal and investment concerns related to the trust.


“The biggest potential benefit of this choice is peace of mind,” Mullen says. A corporate fiduciary trustee will make decisions that are legal and in the best financial interest of both the estate and its beneficiaries, which may help ensure the legacy will last as long as it was intended. “The corporate

entity is likely to endure, and every decision related to the trust is held to the highest standard and scrutiny.”


When Should I Use a Corporate Fiduciary Trustee?


Choosing a corporate trustee may also reduce the time and cost related to the trust management process, especially for complex trusts that require a lot of expertise. “When you have a corporate fiduciary trustee, all of the trust services are provided in one place, versus having to hire a CPA, an appraiser and an investment manager,” Mullen says. “It’s much more efficient.”


Individuals who still want to maintain a personal connection in the control of the trust can name a co-trustee, whose job is to keep an eye on the corporate fiduciary without having to manage all of the trust’s administrative tasks. “This is a popular choice, especially for a surviving spouse,” Mullen says.


With a co-trustee in place, the benefactor can be confident that seasoned financial professionals will care for the estate — and ensure a family member or friend has a say in how those assets are managed. 


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Wealth Transfer