The value of an independent corporate trustee
When establishing a trust and appointing a trustee, grantors face many different options such as choosing between an individual like a family member, accountant or attorney, an institution such as a bank trust company or investment firm or an independent corporate trustee.
Individual trustees – One of the biggest benefits is that they come with the hard-earned and deeply respected knowledge of family relationships and dynamics. They know the key players and how to interact with them, as well as how to determine which situations will be more difficult to navigate and how to manage them. Many are willing to serve for a lower, or no fee at all. But these benefits come with major drawbacks: possible conflicts of interest may arise between family members, beneficiaries and the individual trustee, who may not have the knowledge and experience to deal with the potential issues. A limited familiarity with applicable laws and tax requirements can also complicate the individual trustee’s ability to function properly and according to the stated wishes of the grantor. Successor issues can arise and the probability of the individual trustee’s own death, disability or absence. In addition, such individual trustees often lack the sophisticated technology necessary to capture and report on trust assets and transactions.
Large bank trust companies or investment firms – An institution, unlike an independent corporate trustee, oftentimes suffers from conflicts between what is in the best interests of the trust and what is most profitable for their firm. When these firms fill a dual role as both trustee, responsible for administering the trust, and money manager, responsible for buying and selling assets, impartiality gets clouded. Objectivity in administering a trust comes from independence of any outside influence or monetary motivation.
Independent corporate trustees – These firms offer objectivity that binds them to the terms of the trust document. Unlike the individual trustee who is a parent, sibling or friend who may not be able to act objectively, while an independent corporate trustee can make decisions that are unbiased. The reliability of corporate trustees is unsurpassed by individuals, as illnesses, vacations, injuries or death will not prevent them from administering the trust or threaten its continuity throughout its full term. Independent corporate trustees are also knowledgeable and experienced in all legal and tax requirements, and are fully insured against lawsuits as well as losses due to negligence. While an independent corporate trustee will not manage a trust for free like a family member might do, clients can rest assured that their money is well-spent, as the company is guaranteed to carry out all of the fiduciary duties given to them. Between the internal and external auditors and the government regulators, independent corporate trustees are subject to many levels of oversight.
The Sterling choice – Sterling Trustees, an independent corporate trustee, provides independent trust management services with impartiality and an unparalleled adherence to duty because it is compensated by the trust for a fixed fee and not by sales or broker’s commissions. With no outside influence, Sterling Trustees only goal is to administer the trust in accordance with the grantor’s wishes.