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Corporate vs. Individual

You are free to choose anyone as the trustee of your trust, and frequently an individual is chosen to act as trustee. That individual may be yourself during your lifetime, your spouse, a child or other relative, a friend of the family, or a professional advisor, such as your attorney or accountant.

The advantages that may exist in having an individual act as your trustee are:

  • Likely to have personal knowledge, if it is a family member or close friend
  • Greater ability to influence those to whom distributions are given
  • Aware of changing circumstances over time
  • Less expensive

The disadvantages that may exist with an individual trustee are:

  • Lack of investment experience
  • Need to incur expenses for outside experts, such as accountants and attorneys
  • Possible strains on family relationships or friendships caused by decisions made
  • Perception that beneficiaries may influence the decision maker

The use of a corporate trustee, such as National Advisors Trust, is best evaluated by considering the issues and problems that will arise after the passing of the creators of the trust, when only the beneficiaries are there to monitor the trust and its distribution. Positive characteristics of a corporate trustee in that situation are:

  • In-house experience and expertise in tax, law, and investing
  • Perceived fairness, uniformity, and lack of bias in decisions
  • Assurance of compliance with instructions and agreements through government regulation
  • Resources available to administer complex issues
  • Objectivity

Roles of the Corporate Trustee:

  • Management of discretionary disbursements with the inclusion of the client's trusted advisor
  • Review and filing of fiduciary tax returns
  • Daily valuation of publicly traded financial securities
  • Preparation of monthly, quarterly, and annual trust reports
  • Coordination, along with the financial advisor, of comprehensive communication with grantors and beneficiaries via statements, meetings, and other correspondence