Advisor Flipbooks

The level of experience, skill and knowledge needed to serve as a trustee depends on the type, amount and value of property that the trustee will manage. Vastly different expertise is needed to manage diverse investments, which can range from portfolios of stocks and bonds to special assets, such as real estate, businesses, and oil and gas properties. The trustee must have a solid grasp of the legal issues that may arise during the administration of a trust. Although a trustee need not be an attorney, he or she must be aware of potential legal issues or, at least, know that consultation with an attorney or other expert is essential. The level of experience, skill and knowledge needed to serve as your trustee depends on the type, amount and value of your estate. The trustee may be required to decide which beneficiary is to receive distributions and the timing and size of the payments. This responsibility requires the trustee to be fair and evenhanded with all potential distributions, as well as to resist the persistent claims of those beneficiaries who believe that they are entitled to larger shares. In administering a trust, a trustee must take into account the requirements of both current income beneficiaries and future beneficiaries. An executor may only need to serve for several years, while a trustee may need to serve for many decades. Thus, the age and health of an individual trustee are often important considerations. Accordingly, it should be noted that a corporate trustee does not die or become ill; thus, a professional is on duty at all times. Individuals and well-capitalized, professional corporate trustees capable of handling investment, tax and legal issues are good trustee candidates. Individual or Corporate Trustee? Whether to select an individual or a corporate trustee is one of the most important decisions to be made when setting up a trust and involves a careful consideration of various factors. Trustee positions are demanding jobs filled with potentially overwhelming complex duties and exposure to personal liability. Even though the trustee will be involved in family matters for generations, the appointment of trustees should be a business decision, not an emotional one. An individual should be named as a trustee only if he or she is well qualified to administer and invest the trust. In some cases, individual trustees are well acquainted with the grantor and family beneficiaries and have knowledge of the family situation, the grantor's goals, and the needs and personalities of the beneficiaries. Accordingly, an individual trustee can be in a good position to exercise the "substituted judgment" that the grantor intended. The corporate trustee usually has experience with making and balancing prudent investments suitable for all beneficiaries and will have access to investment opportunities that individual fiduciaries may not. Large corporate trustees employ experts to deal with different types of investments, such as securities, real property, farms and ranches, closely held businesses, mineral properties and perhaps even collectibles. The staff of a corporate trustee will usually have far more experience collectively than any individual trustee. Another significant advantage is the corporate trustee's continuous existence. Corporate trustees do not get sick, take vacations, have family emergencies, or die. State and federal laws that subject them to inspections by state or federal examiners typically regulate corporate trustees, thus increasing accountability and resulting in the beneficiaries having greater security. 1

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