Key Takeaways:
- The selection of a successor trustee is an important decision in designing a trust, as it will affect the lives of beneficiaries for many years to come.
- Serving as trustee is a complex job.
- Corporate trustees have deep fiduciary expertise.
- Corporate trustees deeply understand their fiduciary duties and have the professional knowledge and expertise in the legal and administrative complexities of trust management.
Generally, estate plans name an initial trustee, as well as a contingent or successor trustee. The selection of a successor trustee is an important decision in designing a trust, as it will affect the lives of beneficiaries for many years to come. Serving as trustee is a complex job including managing, maintaining and distributing the trust's assets for the benefit of all beneficiaries. Routine administration may include investing and managing assets, record keeping, distributions, filing tax returns and more. In some instances, this is a difficult job for individuals. The responsibility is so great that even if you serve as your own trustee during your lifetime, it is advisable to consider naming a corporate successor trustee in the event of incapacity or at death.
Here are five reasons to name a corporate successor trustee for your estate plan:
1. Experience
Corporate trustees deeply understand their fiduciary duties and have the professional knowledge and expertise in the legal and administrative complexities of trust management.
They execute their duties daily, across thousands of trusts, and have the capability, know-how, professionalism and processes in place to handle these tasks. An individual trustee may lack the time, experience and skills necessary to manage the various trust administration responsibilities.
Selecting a successor trustee is a crucial decision when designing a trust, as it affects the lives of beneficiaries for years to come.
2. Objectivity
A corporate trustee has a fiduciary responsibility to any grantors and trust beneficiaries and will act in your best interest. It is the highest level of trust, loyalty and care available in the financial industry. These trustees will follow the instructions as they are detailed in the trust. They are in the business of administering trusts and do so faithfully and objectively, treating all beneficiaries fairly and pursuant to the terms of the trust.
3. Continuity
The role of trustee may come years, if not decades, in the future and require the trustee to serve many years beyond the original appointment. A corporate trustee typically has an endless lifespan and guarantees continuity of administration.
4. Protection
Corporate trustees are regulated and monitored by government agencies. And courts tend to view corporate trustees as experts, holding them to higher standards than an individual trustee. A corporate trustee has the financial strength and resources to ensure the interests of the beneficiaries are protected.
A corporate trustee offers several benefits such as experience, objectivity, continuity, protection, and can help preserve family harmony.
5. Preserve Family Harmony
Corporate trustees help maintain family harmony by taking responsibility for trust administration and distributions. It is not uncommon for issues with family members to arise after the death of a grantor. For example, a beneficiary may request a distribution that will invade the trust's assets (possibly at the expense of future beneficiaries). A corporate trustee will weigh this request impartially, without consideration for family politics or other emotional arguments. Corporate trustees provide an impartial voice to resolve and minimize conflict among family members and beneficiaries. They also help prevent family members or close friends who otherwise might have been named trustee from taking sides and dividing a family.
The selection of a successor trustee is an important decision in designing a trust. It is important to consider the various options and factors involved to make the best decision possible. Relieving your family and friends of the trustee burden can give both you and them peace of mind. And knowing your financial affairs are being handled in the most efficient and prudent manner with a professional team of administrators and advisors is priceless.
NOTE: IMPORTANT INFORMATION
Comerica Trust is a unit of Comerica Wealth Management which consists of various divisions and affiliates of Comerica Incorporated, including Comerica Bank, Comerica Bank & Trust, N.A. and Comerica Insurance Services, Inc. and its affiliated insurance agencies. Strategic alliance organizations of Comerica Bank & Trust, N.A. are neither subsidiaries nor affiliates of Comerica Incorporated or Comerica Bank & Trust, N.A. Securities and other non-deposit investment products are not insured by the FDIC; are not deposits or other obligations of or guaranteed by Comerica Bank or any of its affiliates; and are subject to investment risks, including possible loss of principal invested. Comerica and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation.
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