A corporate trustee can provide you with expert guidance and administration in handling a trust. Corporate trustees provide a level of professional expertise beyond what you would get from an individual.

So what is a corporate trustee, and how could using one streamline your estate plan?

What's a Corporate Trustee

Trustees have a complex job. A trustee is responsible for managing, maintaining, and distributing the trust's assets for the benefit of everyone named as a beneficiary. Although that complexity is significant, it's their duty to the beneficiaries that makes the job so important.

Routine maintenance (investing, managing assets, record keeping, distributions, filing tax returns, etc.) can be difficult for family members or friends, especially in complex trusts (i.e. those trust with out-of-state funds, business assets, collectibles as trust assets). A corporate trustee is a professional institution such as a bank or other financial institution that offers these services as a core function—not just as a one-off service.

Corporate trustees can either perform all the duties of a trustee by themselves, or they can be responsible for a portion of the trust functions acting as a co-trustee with another party.

They Deeply Understand The Fiduciary Duty

But why does this matter and what sets a corporate trustee apart from a trustee that you know personally like a close friend or relative?

With a corporate trustee like First Dakota Wealth and Trust, there is less chance of a personal relationship or history creating subconscious bias. Even if the individual has the best interests of all the parties involved in mind, it’s easier for this closer relationship to influence their thoughts.

A Corporate Trustee Prioritizes Your Estate

A key reason to use a corporate trustee is the same reason you use a lot of professional services—focus and dedication. A corporate trustee is in the business of providing trust services, so that is the focus of their efforts and attention on a day-to-day basis.

Individuals that serve as the trustee of a trust will almost invariably have other things competing for their attention like their own job, family, and interests.

The corporate trustee is often part of a larger team that will also provide easy access to more comprehensive wealth planning strategies and expertise as well.

The Right One Has Years Of Training and Recognized Expertise

Unlike an individual trustee, corporate trustees are regulated. That means there is a stricter set of rules and guidelines that the corporate trustee must follow and there is an entity charged with monitoring corporate trustees to make sure that they are following industry guidelines.

Corporate trustees like First Dakota Wealth and Trust are regularly audited by the Office of the Comptroller of the Currency.

That means that if you use a corporate trustee, you have an extra layer of protection and your assets have legal protection, too.

Corporate Trustees Add Value To Your Estate

One of the most important benefits a corporate trustee provides you is their expertise. Individuals who don’t regularly serve as a trustee don’t have the time and experience that a corporate trustee does. That means they could miss things because they are simply unaware.

Corporate trustees often have experience in several market conditions and can lean on that experience while implementing financial strategies that benefit you. That could result in increased value to your trust.

Corporate trustees must also stay current on the state of relevant laws. State and federal laws with regard to investments, taxation, and wealth planning change often. Corporate trustees are required to keep abreast of these changes and regularly attend training to make sure they are up-to-date on the latest changes.

How FD Wealth & Trust Can Help

You clearly do not HAVE to name a corporate trustee. Many people manage their trusts with the help of a family member or friend. But is that going to provide the most benefit to the beneficiaries?

If you know someone who could handle being the trustee, it may be tempting to name them instead of a corporate trustee. But remember, personal feelings can still influence them.

Let's say that you have a brother (we'll call him John) who is competent in all of the areas discussed above. John still might not be equipped to handle the "personal" side of the trustee world.

A corporate trustee won't have trouble sleeping when they tell your daughter that the trust will pay for her college education...and let's be honest, neither would John.

They also don't have trouble sleeping when they tell your son that the trust will not be able to pay for a new little red corvette. Will John? Will his and your son's relationship become damaged because John said "no" to the Corvette? How would you feel about selecting John as your trustee knowing he has to wrestle with those personal tensions? Regardless of whether you think John will make the right choice, is it worth straining relationships over?

If you need help thinking through whether or not you should name a corporate trustee, or have any thoughts that you need help sorting through after reading this, reach out to the First Dakota W&T team and we will be happy to talk with you. We are here to help!

First Dakota Wealth & Trust is the fiduciary investment department of First Dakota National Bank with trustee powers to serve clients during their lifetime, during incapacity, and after death. We help clients develop a financial roadmap to help simplify their financial future.

Disclaimer:

Please note that neither First Dakota National Bank nor First Dakota Wealth & Trust Department, or its employees provides tax or legal advice. This is intended for informational purposes and is not intended to constitute legal or tax advice. Please consult your attorney and/or tax professional for advice related to your specific situation.