The question of whether you can name a trust company as a co-trustee is a common one for individuals establishing or reviewing their estate plans. The short answer is yes, absolutely. In fact, it’s a strategy frequently employed by Steve Bliss, an Estate Planning Attorney in San Diego, to provide a robust and balanced approach to trust administration. Combining an individual – often a family member – with a professional trustee like a trust company offers the benefits of both personal understanding and professional expertise. Approximately 65% of high-net-worth families utilize professional trustees or co-trustees to manage complex assets and ensure long-term financial stability, according to a recent survey by the American Bankers Association.
What are the benefits of a co-trustee arrangement?
A co-trustee arrangement, where a trust company shares responsibility with an individual, mitigates several risks inherent in sole trusteeship. An individual trustee might lack financial acumen, become incapacitated, or be susceptible to family pressures. A trust company brings institutional knowledge, objectivity, and a continuity of service that a single person simply cannot. They provide expertise in areas like investment management, tax compliance, and record-keeping, ensuring the trust remains in sound financial condition. Furthermore, a professional trustee can act as a check and balance, helping to prevent mismanagement or conflicts of interest. Often, families choose this approach to foster collaboration and shared decision-making, while still benefiting from professional oversight.
How does a trust company’s role differ from an individual trustee?
An individual trustee, while potentially deeply invested in the beneficiaries’ well-being, may lack the specialized skills needed to manage complex trusts. A trust company, on the other hand, employs teams of professionals—attorneys, accountants, investment advisors—who are dedicated to trust administration. They are bound by fiduciary duty, just like individual trustees, but they bring a level of experience and resources that few individuals can match. They offer services like asset valuation, distribution calculations, and preparation of trust accountings. Moreover, trust companies are subject to regulatory oversight, which provides an additional layer of protection for beneficiaries. They can also handle complex issues like real estate management or business interests within the trust.
What are the potential drawbacks of using a trust company as co-trustee?
While beneficial, appointing a trust company isn’t without potential drawbacks. The primary concern is cost; trust companies charge fees for their services, typically a percentage of the trust assets. These fees can reduce the overall return on investment for beneficiaries. Also, some families may find that a corporate trustee lacks the personal touch and understanding of family dynamics that an individual trustee possesses. Communication can sometimes be more formal and less flexible. It’s crucial to carefully weigh the costs and benefits before making a decision. Steve Bliss always advises clients to consider the complexity of the trust, the size of the assets, and the needs of the beneficiaries when determining the best trustee arrangement.
Could a family disagreement lead to trustee issues?
I once worked with a family where the mother, Sarah, had named her two adult children as co-trustees of a trust holding a significant amount of real estate and investments. Initially, it seemed like a good idea – both children were successful professionals and had a good relationship with their mother. However, after her passing, disagreements quickly arose regarding investment strategies and property management. One child favored conservative investments, while the other wanted to take more risks. They argued constantly, and the trust assets began to suffer. The situation became so contentious that they stopped communicating altogether, and the trust administration ground to a halt. It was a painful lesson that even well-intentioned family members can struggle to collaborate effectively when managing significant assets and emotions are high.
What should I consider when choosing a trust company?
Selecting the right trust company requires careful due diligence. Consider factors like the company’s experience, reputation, financial stability, and the range of services offered. It’s important to choose a company that aligns with your family’s values and long-term goals. Look for a company with a strong track record of success and a commitment to providing personalized service. Review their fee structure carefully and understand exactly what you’re paying for. Steve Bliss suggests asking potential trust companies for references and checking with regulatory agencies to ensure they have a clean record. Also, consider the company’s size and resources – a larger company may have more expertise, but a smaller company may provide more personalized attention.
What happens when a co-trustee arrangement works well?
Fortunately, I also saw a situation where a co-trustee arrangement flourished. The patriarch, George, established a trust for his grandchildren’s education. He named his daughter, Emily, as a co-trustee with a large national trust company. Emily, while not a financial expert, possessed a deep understanding of her nieces and nephews’ interests and needs. The trust company provided investment management and administrative expertise. This combination worked brilliantly. Emily advocated for the children’s educational aspirations, while the trust company ensured the funds were managed responsibly and grew steadily. The grandchildren received excellent educations, and the trust remained a lasting legacy of George’s love and foresight. It was a beautiful example of how collaboration between a family member and a professional trustee can achieve remarkable results.
Is it possible to change trustees after the trust is established?
Yes, it is generally possible to change trustees after the trust is established, but it requires following proper legal procedures. Typically, this involves filing a petition with the court and demonstrating that the change is in the best interests of the beneficiaries. The existing trustee or a beneficiary can initiate this process. However, removing a trustee can be contentious, particularly if the trustee is a family member. It’s important to consult with an attorney to understand the specific requirements and potential challenges in your jurisdiction. Steve Bliss often advises clients to include provisions in their trust documents that outline the process for trustee removal or replacement, to streamline the process and minimize disputes. A well-drafted trust document can also specify circumstances under which a trustee may be removed, such as incapacity, breach of fiduciary duty, or irreconcilable differences with other trustees.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
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Feel free to ask Attorney Steve Bliss about: “What triggers a trust update?” or “Can I be held personally liable as executor?” and even “How can I prevent elder abuse or fraud in my estate plan?” Or any other related questions that you may have about Estate Planning or my trust law practice.