If you have created a dynasty trust that you intend to last for decades into the future, the right trustee is critical to the trust’s longevity and ultimate success.
Initially you may think that a family member, such as a sibling (“Uncle Fred” to your children, who are the initial beneficiaries of your Dynasty Trust), is the best choice as trustee. After all, Uncle Fred understands the personalities and varying needs of your children, and since Fred has always been frugal, he will surely keep the costs of administering the trust down. These are good reasons to possibly select a family member, like Fred, to serve as trustee.
However, Uncle Fred may not make a good trustee for a long-lasting dynasty trust since he is probably not be equipped to handle all of his fiduciary obligations on his own. Instead, he will need to hire legal, investment and tax advisors to insure that the trust is being distributed, managed and invested as you have intended. All of these expenses will add up and may ultimately cost much more than the fees of a corporate trustee, such as a bank or trust company. Many corporate trustees can meet all fiduciary obligations under one roof for one comprehensive fee.
Below are five reasons why you should consider choosing a corporate trustee for your dynasty trust instead of Uncle Fred:
The duties and responsibilities of a trustee are extensive: From managing the requests and expectations of the current and remainder beneficiaries, to providing periodic reports of the trust assets, liabilities, receipts and disbursements to the current and remainder beneficiaries, to prudently investing the trust assets, to preparing and filing all required tax forms, the work of a trustee seemingly never ends.
Due to the breadth of duties and responsibilities, a corporate trustee rather than Uncle Fred may be the best option for your dynasty trust. Please contact us if you have any questions about the selection of a trustee generally or the use of corporate trustees, so that we can assist you in selecting the right individual or entity to serve as your trustee.
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