Selecting A Corporate Trustee

A comment on my recent post "Five Questions To Consider When Naming a Trustee" writes, "Your comment about a corporate trustee is interesting, as I am leaning significantly that direction because of a lack of qualified individuals within my personal relations to manage my trust. How would you recommend finding a suitable corporate trustee ?"

Corporate trust services are offered by trust companies, banks, some attorneys, and some financial advisors.

Your first step should be to determine just what services you expect to receive from the trustee. You can choose a trustee to perform the administrative functions only. This could include:

• Administration of the trust in accordance with the trust agreement.
• Accounting and reporting of income, expenses, and capital gains and losses.
• Distribution of income and/or principal to beneficiaries as determined by the trust.
• Annual administrative account reviews
• Issuance of broad fiduciary guidelines
• Filing of annual trust income tax returns.
• Providing custodial services and executing transactions.

Using only administrative trust services the beneficiaries or a trusted financial advisor could be entrusted with managing the assets of the trust.

You can also hire a trustee to provide both the administrative and asset management functions.

When you have determined exactly what services you want the trustee to provide you can move to the next phase which is where you should request proposals from several sources. If possible you should meet face to face with a trust officer from each firm you interview. While very intangible the personal touch is a large part of the function of corporate trustees.

Some of the questions you will want to ask include:

• What account minimums does the trustee require?
• How long have they been in the trust business?
• How many trusts do they manage and what is the average size of their trust accounts?
• What level of experience does the staff have and how did they acquire that experience?
• What is the staff turnover?
  
• Do they have an open architecture or are they limited to proprietary in house investment options?
• What conflict of interest might the have?
  

Of course you will also want to compare investment performance and fees along with the services provided. Location is also a consideration. Will they be accessible to your heirs? And finally, be sure they are really in the trust business, not just going through the motions so they can advertise that they offer trust services.