As we enter the golden years of our life, we are often faced with the challenge of how we can safely put our savings and investments to use while also ensuring that they are properly distributed when we pass. This task can be complicated by uncertain markets, complex financial options, and hidden costs.
It’s important that the assets you have spent your life accumulating are well managed and properly administered. A corporate trustee can be a beneficial option for ensuring your financial wishes are executed, especially if you have a large estate with diverse assets, and complex tax considerations. We’ll take a look at what a corporate trustee is, and why you may want one.
What is a corporate trustee?
A trust is a legal agreement that transfers legal title of an asset to a trustee, who then manages the asset for the benefit of the grantor or another beneficiary. The trustee will hold, manage, and distribute the assets to a beneficiary as directed by the trust agreement. The legal structure of a trust can allow you to reduce legal fees, save on taxes, and have continuous control of your assets, regardless of your current health situation.
When you establish the trust, you can name an individual to be the trustee, or you can name a corporate trustee. Simply put, a corporate trustee is a trust company or bank trust department that you name to manage your assets. They can take on many different roles during the life of the trust, such as co-trustee, investment agent, and successor trustee. They typically take on these responsibilities for a percentage of the value of the assets that they manage.
Why do I need a corporate trustee?
A corporate trustee can have several distinct advantages. It’s important to consider these advantages when you decide to assign a trustee to your trust.
Focus and experience
A corporate trustee is solely focused on fulfilling the instructions for the execution of your trust. Whereas a singular person may have personal and professional priorities that vie for their time, they can utilize a department of finance professionals who will be focused on your trust. Because these companies manage trusts on a regular basis, they have experience with all of the different kinds of trusts, legal responsibilities, tax considerations, and estate planning strategies needed to keep the trust in good order.
Consider all of the responsibilities of a trustee such as managing assets, filing taxes, maintaining documentation, paying bills, and distributing income and assets. There is a lot of work that can go into administering a trust, and each piece requires expertise to do it well. A corporate trustee can leverage the diverse capabilities within their organization to provide your trust with great service in all areas.
State and federal agencies regulate corporate trusts. They are considered “experts” by most courts, so their level of competency is expected to be much higher than a non-professional individual. Even though a corporate trustee is already paid for their services, having regulatory oversight can create an additional layer of protection for your wealth.
Your trust assets will also enjoy a layer of legal protection. By law, trust assets must be separate from all other company assets and cannot be loaned out or mixed with the corporate trustee’s other assets. Additionally, while the FDIC doesn’t insure you, your assets are protected against fraud and theft.
Return on investment
One of the greatest advantages to having a corporate trustee is the value that their expertise can bring to the assets in your trust. Corporate trustees are professionals who make it their job to understand financial strategies that will maximize your returns in any market. They may also be highly incentivized to maximize your funds’ returns, as they are typically paid based on the value of your assets.
To get the best plan for your trust, you can sit down with a certified financial advisor and outline all of your priorities, goals, and risk tolerance. Once this plan is in place, you can use their advice to administer the trust as you see fit, or have them make decisions on your behalf. The average person usually doesn’t have the resources, focus, and expertise to provide you with the information and advice you need to create a plan that maximizes your trust’s goals.
Continuity and dependability
A corporate trustee will always be available when you need them. You won’t have to worry about an individual who may be unreachable, sick, or on vacation. If you have urgent needs to attend to or need to work with someone on your schedule, you have a professional service that will be continuously available to you. It is the job of a corporate trustee to be responsive to your needs.
An Objective 3rd Party
When considering an individual to be your trustee, often people will choose a family member. While family members can be trustworthy, they are rarely objective when it comes to managing assets for relatives. A corporate trustee can be removed from personal opinions about your finances and assets, and provide you with advice that solely is focused on the long-term goals that you set out for your trust.
Having a trusted third party to execute a trust, such as Trust Point, can remove much of the burden and stress from family members and provide a peace of mind that the trust is administered as intended.
Trust Point can help
Trust Point was founded as a trust company as its primary purpose over a century ago. We continue to be an industry leader in trustee services. Contact us if you want to explore how we can help you set-up a trust that meets all of your long-term goals and wishes.