The Essential Role of a Corporate Trustee in Estate Planning
May 26, 2023
In our daily lives, despite continuous efforts to ensure financial security, sometimes it becomes daunting to deal with complex financial matters such as organizing assets, planning for the future, and providing for our loved ones. This is where trusts – a powerful and versatile estate planning tool – come into play. Trusts can make the process of settling your estate more manageable and protect your assets while providing for the management of your assets over a longer period. Given the significance of trust management, the role of a trustee becomes equally essential. In this blog, we will delve into the exclusive world of trusts, focusing on the duties and responsibilities of a trustee in preserving and managing your hard-earned wealth.
WHAT IS A TRUSTEE?
A trustee is an individual or corporate entity appointed in a trust document to manage the assets and affairs of the trust. The appointed trustee holds a fiduciary responsibility to protect and distribute the assets of a trust according to the intentions specified in the trust document by the trust grantor (the person who creates the trust). Trust assets may include a variety of different types of property like real estate, bank accounts, investments, and more. Depending on the type of trust and its stipulations, the trustee’s responsibility may span decades, requiring long-term commitment and an exceptional level of attention to preserve the legacy.
KEY ROLES AND RESPONSIBILITIES OF TRUSTEES
Fiduciary Duty to Act Prudently: A trustee’s most fundamental responsibility is to manage the trust’s assets in the best interest of the beneficiaries. Since trust funds often involve considerable sums of money, a trustee must exercise their judgment with skill and care, as a professional would.
Impartiality: A trustee must treat all beneficiaries fairly and impartially, especially in a trust with multiple beneficiaries involved. This means that the trustee should not act in favor of one beneficiary at the expense of another, instead distributing the trust assets according to the rules laid down by the trust grantor.
Administration: The trustee’s role is not limited to asset management – they must also deal with any legal, accounting, and tax-related matters of the trust, ensuring clarity and compliance with relevant regulations.
Communication and Record Keeping: The trustee is obligated to stay in communication with the beneficiaries, keep them informed about the trust’s activities, and provide statements on a regular basis. Additionally, a trustee is required to maintain accurate records and accounts of the trust, tracking income, expenses, and transactions.
Distribution of Trust Assets and Income: A trustee must understand and comply with the distribution rules set by the trust grantor. This may involve making discretionary decisions on distributing the trust assets or income to the beneficiaries, as well as settling the trust upon its termination.
WHY CHOOSE A CORPORATE TRUSTEE?
While it is possible to appoint an individual as a trustee, there are several advantages to appointing a corporate trustee like Bridges Trust Company:
Expertise: Experienced corporate trustees possess the necessary knowledge and experience to handle complex financial matters, ensuring your trust is managed professionally and efficiently.
Continuity: Corporate trustees can provide long-term consistency and continuity of management, as opposed to an individual trustee who may become unable or unwilling to serve over an extended period.
Impartiality and Objectivity: Corporate trustees are less likely to be influenced by personal relationships with beneficiaries, allowing them to make unbiased decisions in the best interest of the trust.
Regulatory Oversight: Corporate trustees are subject to strict regulation and oversight, promoting transparency, trustworthiness, and enhanced legal compliance.
Entrusting a qualified and experienced trustee, like Bridges Trust Company, can be crucial for the successful administration and management of your trust. Trusts are a key aspect of estate planning that can help ensure the financial security of your family for generations to come, and a professional trustee can be the reliable partner that carries out your intentions and safeguards your legacy.
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