What are the pros and cons of selecting a corporate Trustee?
Corporate trustees can be a good option for those who need the peace of mind knowing that their assets will be responsibly managed by professionals. That having been said, it's still important to vet the particular corporate trustee you wish to use by meeting with them and discussing what it would be like to work with them and to ensure that they meet your expectations. Many corporate trustees require specific provisions to be included in your trust before they are willing to agree to act as Trustee, so it's important to incorporate those provisions, if necessary.
One of the perceived downsides of hiring a corporate Trustee is the typically higher fees that they charge. Often the corporate trustee will charge a fee equal to a percentage of the assets they will be managing, which may or may not include the fees for managing investments. However, corporate trustees may be staffed with attorneys or other tax and financial professionals, and therefore may not incur the expense that a private individual would have in hiring such professionals.
A corporate Trustee may also have difficulty in carrying out provisions in your trust that requires a high degree of discretion or judgment. Family members, on the other hand, may be more familiar with the dynamics between the members and therefore exercise judgment in a way that would be more consistent with your wishes. Ambiguous standards for trust distributions or distributions requiring beneficiaries to behave in a way that is not susceptible to objective analysis may present unwanted opportunities for conflict between the corporate trustee and a beneficiary.
Corporate trustees are not a new or recent creation, and many have adapted to the changing market to provide more competitive services. So, if you're faced with a situation where a corporate trustee might be a viable option, it's worth exploring.