Angela Alvig, CPA

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Making your Succession Plan

Creating a Trust is a little like starting a business. While you are still living, you might be the CEO (Trustee) of your Trust. However, figuring out the best succession plan can be a complicated decision. Maybe one of your children is ready to handle the family business, but is he or she really the best person to handle the family wealth? You must thoughtfully weigh the decision to pick a family member trustee, a corporate trustee, or an independent trustee to act on your behalf.

As is the case for other decisions, there are pros and cons of different options and your choice will have to reflect your values and particular scenario.

These are some of the main benefits to naming a corporate trustee or an independent 3rd party as Trustee.

  • Impartial – An independent trustee is making decisions based on the terms of your document and state law.None of the past relational dynamics or future family tensions come into consideration.
  • Experienced – A corporate trustee usually has experts at every level while managing your account and assets (trust officer, portfolio manager, compliance, operations, legal department, etc.).
  • Professional – A corporate trustee speaks the language of the industry, knows when something requires additional guidance and knows the available resources to get the problem solved.
  • Fiduciary Standard – A trust company is legally bound to follow a standard that puts you and your beneficiary’s interests above its own.

What are the drawbacks or limitations of selecting a corporate trustee?

  • Cost – You should expect to pay somewhere between 1% - 2% of the account balance annually for a full-service experience.
  • Team make-up – When you choose a trust company, your account is getting assigned to a particular employee with a particular personality and skill set. Unfortunately, you and your family have little say over the staffing decisions of the trust company.
  • Alternate decision makers – If you need a Trustee, you probably also need an Executor, an Attorney-in-Fact and a Healthcare Agent. Most corporate trustees won’t serve in all of these areas.

Whether you choose a family member trustee, another individual or a corporate trustee, here are some questions you should ask yourself before naming a Trustee.

  • How does this company or person fit into the dynamic of my overall team? 
  • Will they work well with my family or other professionals?
  • Do they understand my goals now and over the life of my trust?
  • How does this person add value to my team?

Just like the family business, it will probably take the right mix of people in the right roles to accomplish the larger goal.Let us know what role we can play on your team.