Besides deciding what will happen to your estate when you pass on, one of the most important decisions you need to make when creating your estate is the choice of a trustee.
Your choice of a trustee can mean the difference between efficient and professional handling of the trust you leave behind and one that is riddled with conflicts and misappropriation.
You can designate an individual, a company or a combination of both to serve as trustee over any trust left by your estate. While naming a family member as a trustee has some benefits, it is important to note that a corporate trustee offers expertise that you may not find in a family member. This is why it is important that you weigh your options carefully.
Here’s why a professional trustee may be best:
Their expertise
An individual trustee can easily make costly mistakes or, worse still, mismanage your trust assets. And since auditors do not review individual trustee decisions, significant mistakes can go noticed for years. This can result in fines and lawsuits if the errors had something to do with taxes.
Trustee companies, on the other hand, employ expert auditors who ensure that trusts under their care are properly managed. These auditors carefully review compliance procedures, account management processes as well as fiduciary and fulfillment duties.
Their fees
Most people believe that individual trustees are cheaper than corporate trustees. This may not be entirely true, especially when dealing with complex assets. An individual trustee must bring on board other professionals like certified accountants, attorneys and investment managers to help them execute their trust-related duties.
When you add up the costs of these professionals to the trustee fee, you might end up paying more than you otherwise would if you hired a professional trustee. Most corporate trustees bundle up their fees into a single comprehensive fee.
A trust is one of the most important estate planning tools you can have. Before nominating a trustee to oversee your trust’s assets, it is important that you take these and other factors into account.
