Corporate Trustee 101: What Are They And Why Are They Important?


The world of finance is becoming increasingly complicated. Both state and federal governments implement laws relating to estate taxes, investments, and income.

These laws frequently change, confusing people who lack the expertise to manage their finances properly. Different types of transactions also result in legal issues as the wealth of individuals accumulates, and it’s especially true for business owners. Add to it the challenge of keeping your savings safe, growing your investments, and ensuring that all of your assets get appropriately distributed to your loved ones.

If it’s an effective administration of trust that you want, a corporate trustee can be your best bet. They have the knowledge and experience required to ensure that your wishes get carried out in the best ways possible. Part of their everyday responsibilities is to deal with trust, so they have the necessary expertise to stay abreast of economic and tax law changes that may impact yours. While it’s true that you can choose an individual or a family member as your trustee, they, more often than not, lack the high level of objectivity that a corporate trustee must possess.

What Is A Corporate Trustee?

Whether it’s a trust company or a bank trust department, a corporate trustee has experienced employees who can help you build and manage your wealth, and protect all of your assets once you decide to put them in a trust. What’s a trust?

It’s a legal document that you can utilize to keep control over all your assets while you’re still alive. It can also help you save from taxes while reducing unnecessary fees along the way.

Whether you become mentally or physically incapacitated, a trust will remain valid and gets carried out after you die. A trustee can manage every asset your trust controls, so it’s essential to carefully and wisely select one to take the role upon setting up the trust. Should you use a corporate trustee instead of an individual adult from your family? The answer is yes, and below are some of the reasons why.

Corporate Trustee: Why Are They Important?

No doubt, a corporate trustee, with their professional experience and expertise, can be of great help. It’s essential to choose one that can best manage your trust because of the following reasons:

1. Maintains Family Unity

Since a corporate trustee takes the sole responsibility of managing the trust, a conflict between family members can be avoided. As you probably already know, it’s common for resentment to build and disputes to occur among your family members when you die. Especially when it’s already time to distribute your assets, if you’re only going to choose a person to be your trustee, he or she might get easily affected by the issues around, get pressured, and end up making bad decisions in the end. A corporate trustee, on the other hand, ensures that everything you wish for gets implemented. They do not fear scrutiny, and they make reasonable actions regardless of what your family members think.

2. Better Asset Protection

Many people commit the mistake of choosing a related party or even their beneficiary as the trustee of their trusts. This kind of setup is problematic since it’ll be easy for the creditors to tell that the beneficiary should receive the trust property after a divorce, even if the grantor wants a different direction for their assets. You can avoid such an issue from arising in the future if you have a corporate trustee at your disposal. Since a corporate trustee has absolute discretion whether or not releasing funds from the trust is a reasonable action under given circumstances, litigants will find it difficult to force unfair disbursements.

3. Effective Management Of Complex Situations

Larger trusts can have unique tax and legal needs. They require expert management, something that individual trustees can’t provide you. Yes, an individual trustee can ask the assistance of appropriate experts. However, it doesn’t change the fact that once the sophisticated asset management required gets beyond their scope, they will still lack the necessary skills to meet the various needs of complex estates.

4. Higher Investment Returns

The value of the expertise that a corporate trustee can bring is incomparable, and it’s one of the advantages of having them at your disposal. They do their best to understand financial strategies and work with investment management technology services so they could better help you maximize your market investment returns. Yes, they’re a more expensive option than opting for an individual trustee, but if they’re going to help you grow your wealth exponentially, then why not hire them?

5. Additional Layer Of Regulated Protection For Your Trust

A very significant reason why getting the services of a corporate trustee is ideal is that they offer regulated protection for your wealth. Both state and federal agencies implement regulations to ensure that a corporate trustee stays competent and meets the high standards of operations required by the law. Courts consider them as “experts”, too. Again, you can opt for an individual trustee. However, if you want an additional layer of legal protection for your assets, the regulatory oversight that comes with hiring a corporate trustee is incomparable and can do wonders for you and your family.

6. Ensures Continuity And Dependability

An individual trustee can sometimes become sick or unreachable because of being on a vacation trip. Such a situation could be a problem, primarily if an urgent need for their assistance suddenly arises. The good thing about a corporate trustee is that they’ll give you the assurance of continuity and dependability, which means that they’re going to be continuously available anytime. It’s their job to be responsive at all times, and it’s what you can get from them exactly. No need to worry about your needs or concerns not being addressed immediately.

Final Thoughts

A corporate trustee is what you need if you want to protect your trust and ensure that all your wishes get carried out correctly when you pass away. A corporate trustee ensures harmony in your family, gives you peace of mind, and takes every chance to grow your wealth.

If you’re looking to get the services of a corporate trustee, make sure to ask about the department’s experience, how long they’ve been dealing with trust, and the average size of trust properties they manage. You can also compare their fees and ask for sample reports from them. There are a lot of options for a corporate trustee to handle your assets out there, but always choose one from which you could benefit the most.

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