Typically, private trustees have backgrounds in law, social service, investment or bookkeeping. They work closely with attorneys and may contract with geriatric care managers for care coordination services.
Boutique, corporate trust companies can offer the safeguards and professionalism of large institutions without the financial costs. They can also tailor the trustee experience to your family, solve issues arising from unique asset classes and concentrations, fulfill State income tax planning goals and harvest additional deductions.
Whether you’re an advisor or a client, deciding on the right trustee for your family can be confusing. Some people start by considering a friend or family member. However, this may not be the best option. Family members are often unprepared to handle the responsibilities and costs associated with being a trustee. They can also be influenced by their personal opinions and financial interests. Choosing a reliable private trustee service can remove these conflicts and ensure that your assets are managed as you’d like them to be.
Private trust companies offer many advantages over traditional trustees, including lower fees and more beneficiary service continuity. They can also provide greater privacy by limiting disclosures to certain parties. Additionally, they can avoid state income taxes, which keeps more of your trust assets in the trust, rather than in government coffers. These benefits are why many advisors recommend them for families with high-net-worth clients. They can also help you avoid costly legal disputes and pitfalls that can occur when family members are involved in the process.
Many people choose to name friends or family members as trustees. After all, they are familiar with the beneficiaries and likely understand the family dynamics. But, the reality is that they are often not the best choice to administer an estate or trust.
Family members do not always have the financial expertise, flexibility or time required to adequately discharge their fiduciary duties. Moreover, they may be exposed to personal liability when acting in their role and may create a conflict of interest by having direct investments or significant influence on family wealth.
A private trust company can provide a high level of transparency, efficiency and security for trust administration. In addition, extraordinary flexibility can be built into a trust through the use of non-related special co-trustees or a trusted protector. This can help minimize income taxes for beneficiary beneficiaries and protect assets from creditor claims in the event of a divorce or bankruptcy. It also helps to avoid forced distributions that result in beneficiaries being taxed at a higher rate than they would be without the trust.
Although it may be tempting to trust a close friend or family member to administer your trust, they have many personal and professional priorities competing for their time. They may also lack the knowledge or experience to carry out your financial and estate plans as you envisioned them.
Professional trustees have the expertise to understand the legal responsibilities, tax considerations and fiduciary duties of trust administration. They also understand the nuances of managing investment accounts and other assets held in trust. A private trust company will also be continuously available to serve you and your beneficiaries, whereas an individual can be unreachable or on vacation.
Choosing a local trustee can help preserve your privacy and minimize expenses. Lee Bank, for example, serves clients in western Massachusetts and is an independent, locally-owned bank committed to keeping money rooted in the community. It also provides deed transfer service that helps protect your assets by avoiding the costly probate process.
A trustee is expected to execute a complex range of duties that include investment management, recordkeeping, tax preparation and accounting. Individuals can have a hard time meeting all of these demands due to their busy lives and family obligations.
Trustees also must make decisions about when and how to distribute assets to beneficiaries. They may need to withhold funds from financially irresponsible beneficiaries or they might need to decide how much risk is acceptable for certain investments. Complicated family dynamics and the potential for grief can make it difficult to make objective decisions.
A corporate trustee, on the other hand, is an impartial third party with a deep understanding of applicable legal requirements and the intricacies of a wide range of trust types. United Wealth Management can also provide in-house Trust Counsel, who can quickly address and resolve legal issues that may arise at no additional cost to you or the Trust. This objectivity can help ensure that the wishes expressed in your Trust document are carried out as intended.