Should You Choose An Individual or Corporate Trustee?
- Posted in: Estate Planning
One of the most common questions asked during the process of creating a trust is “Is it better to have an individual or a corporate trustee?” The easy answer to that question is that there is no easy answer. There are advantages and disadvantages to both, and the best choice for your trust will depend not only on your circumstances, but also on your personal comfort level. We can, however, make the question a little bit easier to answer by looking at the pros and cons of each choice.
An individual trustee has the benefit of knowing you and your family well, and is likely to fulfill your wishes for your beneficiaries accordingly. You can expect that as a friend, your trustee will remain close to your family and stay on top of changing circumstances and financial needs. On the down side, the individual you choose may lack significant investment experience, and have to hire professional help—at the expense of the trust. And in some cases, having a personal friend in charge of making distributions can end up straining the friendship.
A corporate trustee, on the other hand, is impartial, and will make uniform distributions based specifically on your wishes as defined in your trust. A corporate trustee has access to resources and professionals with plenty of knowledge in the areas of investment and tax law. The drawbacks of a professional trustee are that they are indeed impersonal, and will follow the letter of your trust, not the spirit of it. A corporate trustee is also not likely to know when your beneficiaries’ financial needs have changed. Finally, official channels and red tape may make it more difficult for your beneficiaries to ask questions, request changes, or lodge complaints.
Because there are so many pros and cons to both individual and corporate trustees, some grantors have chosen to compromise by naming an individual to work in conjunction with a corporate trustee. Others have asked friends with legal or investment experience to serve as their trustee.
If you are unsure which choice is best for your trust, talk it over with your attorney. We have experience with the entire range of trustee options, and can help you make a choice that will bring peace of mind to both you and your beneficiaries.