A Revocable Living Trust includes four key players: the trustmaker, the initial trustee, the successor trustee, and the beneficiaries. When you create a Revocable Living Trust, you are the trustmaker and usually also the trustee. Your successor trustee will take charge and manage your estate after you pass away. You have the choice of naming an individual as your trustee or a corporate trustee. Here are some of the pros and cons of appointing a corporate trustee.
The Potential Upsides of Appointing a Corporate Trustee
The more complex and valuable an estate is, the more challenging the job of trustee is. One advantage of using a corporate trustee is the resources at hand. While an individual trustee may sometimes not be immediately available to handle an emergent trust issue, a corporate trustee is always available during business hours. Trust officers and staff members have the time to handle the tasks involved in serving as trustee. In addition, a corporate trustee has the in-house staff with the knowledge and experience to provide the professional services that an individual trustee would have to hire, such as investment strategists, accountants, and tax preparers.
When it comes to peace of mind that your instructions in the trust are being carried out, a professional trustee is subject to state regulation and oversight. This gives you added assurance that the estate will be administered according to the required duty of care.
At first glance, it may appear that appointing a professional trustee is the more expensive option. The fees are usually subject to the corporate fiduciary’s fee schedule and higher than what an individual trustee would receive. But appointing a professional trustee may be more cost effective because of the ability to handle tax, accounting, investment, and reporting responsibilities in-house and in a coordinated, more efficient way.
A corporate trustee can be a good solution for the trustmaker who doesn’t want to burden a friend or family member with the responsibility, doesn’t want to complicate matters by appointing a trustee who is also a beneficiary, or simply doesn’t know of anyone fit for the task.
Finally, a professional trustee has no emotional connection to the trustmaker or beneficiaries. Some decisions a trustee must make on behalf of the estate are challenging already. The professional trustee handles them without the complications that emotions can add to the situation.
The Potential Downsides of Appointing a Corporate Trustee
That same lack of emotional connection to the trustee or beneficiaries that is a pro to hiring a professional trustee may also be a con. A corporate trustee’s less personal approach to the estate management can mean the professional trustee is more bound to the letter of the trust agreement and less able to look for the trustmaker’s intent in creating the trust agreement.
An individual trustee may be available at a lower cost or even no cost to the estate. The individual trustee’s compensation is usually subject to the trust agreement or to the statutory schedule of commissions. But some individual trustees with a personal connection to the family may choose to waive any fee at all. On the other hand, an individual trustee without the professional knowledge needed may have to hire out for professional services to properly manage a more complicated the estate. In sum, cost is a factor that may hinge on the complexity of the estate.
Conclusion
When it comes to selecting an individual or a corporate trustee, the right choice is the one that the trustmaker feels the most confident in to carry out the trust.
Work with an Experienced New York Estate Planning Attorney
Roth Elder Law, PLLC can help you select your successor trustee. Call Roth Elder Law, PLLC today to schedule an initial meeting at 607-962-6162 or complete this intake form and we’ll be in touch.