Date: Jul 06 2018
It’s natural to want to choose a family member or someone you know well to serve as your trustee. However, it sometimes also makes sense to choose a professional trustee like a bank or trust company as the trustee or co-trustee.
Selecting an institution to serve as your trustee may help you avoid some of the problems that can occur when a family member, friend or business associate is selected as a trustee, because institutional trustees:
- Have the skills and experience, along with the resources and systems, to effectively administer the trust in accordance with the settlor’s wishes.
- Can be objective and impartial and won’t have conflicts of interest that family members might have.
- Can more easily say “no” to requests that should be declined.
- Continue in business for decades so the family will not have to choose a successor down the road when an individual trustee dies or becomes incapacitated.
- Have insurance to cover a mistake, so it can be easier to recover damages for ineffective management or mismanagement of the trust assets.
Keep in mind that an institution has procedures and processes they follow, so recognize that:
- Institutions are not always fast-moving machines and decision-making can take time.
- They may be more conservative than your family would like.
- In addition to being conservative, some institutional trustees are uncomfortable with holding concentrated positions in family-controlled enterprises and in private equity investments.
- Trust officers will be less familiar than others might be with your family’s circumstances and values.
Institutions also have some disadvantages you might not face with other trustee choices:
- Trust officers sometimes move to other positions within their organizations or to entirely different institutions and their replacements will need to be “re-educated” about the family and each trust when turnover occurs.
- Institutions might be acquired and the character of the institution may evolve and result in a different institution acting as your trustee than the one you selected.
Click below to watch the video and download the whitepaper, Who Can I Trust to Be My Trustee?