Does the idea of putting control over trust assets in the hands of a virtual stranger give you the shivers? Or maybe you’ve heard that corporate trustees are pricey, take longer to make decisions, and—due to personnel changes—may mean your beneficiaries will have to deal with a series of point people rather than one individual.
All are potential drawbacks. But before you opt for a friend or family member as trustee, consider the pros of choosing a corporate trustee.
Of course, it’s essential to choose corporate trustees with care. Plan to talk to several candidates. Consider factors such as how long the trust department has been in business, the number and the average size of the trusts it manages, and the experience level of its employees. Because you’re looking for someone you’ll be comfortable talking to about your personal relationships, you’ll probably want to meet with your top choices in person.
Delve into the financials by comparing investment returns, fees—including when the last increase took place and how much of a bump it was—and services. Ask for samples of trust statements or reports to see whether they’re written in language a lay-?person could understand. Find out what restrictions, if any, limit the corporate trustee’s investment options; some conservative firms provide only internal investment options, which significantly reduces a trust’s investment opportunities.
When you’ve settled on a corporate trustee, consider when to introduce the trust officer to your family. Often, trustees are designated to take charge after the grantor’s death—a time of great stress and instability for the family. A better bet may be to bring in a corporate trustee now and hold regular family meetings, giving the trustee and beneficiaries the chance to build a working relationship. And designate one or more persons to have the power to remove and appoint a corporate trustee if it becomes necessary.