It’s natural to want to choose a family member or someone you know well to serve as your trustee. However, it sometimes also makes sense to choose a professional trustee like a bank or trust company as the trustee or co-trustee.
 

Selecting an institution to serve as your trustee may help you avoid some of the problems that can occur when a family member, friend or business associate is selected as a trustee, because institutional trustees:

• Have the skills and experience, along with the resources and systems, to effectively administer the trust in accordance with the settlor’s wishes.
• Can be objective and impartial and won’t have conflicts of interest that family members might have.
• Can more easily say “no” to requests that should be declined.
• Continue in business for decades so the family will not have to choose a successor down the road when an individual trustee dies or becomes incapacitated.
• Have insurance to cover a mistake, so it can be easier to recover damages for ineffective management or mismanagement of the trust assets.
   

Keep in mind that an institution has procedures and processes they follow, so recognize that:

• Institutions are not always fast-moving machines and decision-making can take time.
• They may be more conservative than your family would like.
• In addition to being conservative, some institutional trustees are uncomfortable with holding concentrated positions in family-controlled enterprises and in private equity investments.
• Trust officers will be less familiar than others might be with your family’s circumstances and values.

Institutions also have some disadvantages you might not face with other trustee choices:

• Trust officers sometimes move to other positions within their organizations or to entirely different institutions and their replacements will need to be “re-educated” about the family and each trust when turnover occurs.
• Institutions might be acquired and the character of the institution may evolve and result in a different institution acting as your trustee than the one you selected.

~~~

Click below to watch the video and download the whitepaper, Who Can I Trust to Be My Trustee?