Why Consider a Professional Trustee?
The role of a trustee can be onerous and time consuming. For individuals who may be unfamiliar with managing finances and investments, real property, or taxes, it can be both confusing and frustrating. The more complex the estate and instructions, the more difficult it can be for a trustee to juggle this fiduciary role on top of his or her day-to-day responsibilities and commitments.
While keeping it in the family may seem like a good idea, it’s important to consider how this role may affect family dynamics:
- Trustees are often required to make tough decisions that might not be popular with all your beneficiaries. After all, the trustee is carrying out your instructions, not your beneficiaries’ wishes.
- This can be a difficult role to fulfill for a family member, who may not be unbiased, or may wish to act in a manner that avoids hard feelings within the family, rather than carrying out your instructions.
- Also, few family members have the level of investment management skills, or expertise in fiduciary law and practice, required to efficiently and effectively manage the many aspect of trust administration.
The Benefits of Naming a Professional Trustee
Naming a professional trustee not only helps to eliminate potential conflicts of interest between family members, but can offer additional benefits for both the trust and its beneficiaries, including:
- Unbiased loyalty and independence to carry out your wishes
- Knowledgeable management, protection and defense of trust assets
- Experienced oversight of the investment process to be carried out by your financial advisor
- Timely and accurate statements of the account to keep you and all current beneficiaries informed
- Consistent account reviews
- Accountable collection and prudent distribution of income and assets
- Professional tax reporting, filing and comprehensive regulatory compliance on behalf of the trust
Naming a professional or corporate trustee can also help eliminate or head off potential family conflicts of interest and relieve family members of responsibilities they be unprepared to take on. The trust advisor or PTC may recommend that the family appoint a family member to serve as a spokesperson or personal representative for communication and decision-making purposes.