It Is A Mistake Not To Consider A Corporate Trustee

Here is another common mistake in our “Estate Planning Mistakes To Avoid” series:  Do not assume family members are the best choice to act as Trustee.  You should consider using a corporate Trustee while incorporating powers and provisions that give your children and family members the ability to oversee, control and remove the corporate fiduciary.

If you have utilized trusts under your estate planning documents, you must decide who will serve as your trustee.  The trustee has a duty to comply with the terms of your trust.

Some of the trustee’s duties are:

  • Distributions of income and principal.
  • Making prudent investment decisions.
  • Managing real property.
  • Filing income tax returns.
  • Interacting with beneficiaries.
  • Exercising discretionary authority.

You might not have the perfect family member to appoint as a trustee.  Not everyone is well suited to handle the fiduciary responsibilities and requirements.  Trustees must have the time, focus and acumen to deal with the trustee responsibilities.

Why consider a corporate trustee?  A corporate trustee is a highly trained professional that can offer experience, stability, objectivity and confidentiality.  Most are insured and bonded.  Also, many corporate trustees belong to a team of professionals from various disciplines that can assist and advise the corporate trustee on issues that might arise concerning the administration of your trust.

  • Experience: The trustee you select will be responsible for the financial well-being of the trust estate.  The corporate trustee will feel comfortable making investment decisions or choosing and supervising an investment advisor.  The corporate trustee will have the experience in evaluating difficult requests for distributions.  The corporate trustee will be more capable of saying “no” if they think that is the right answer.  They will provide a buffer so that the family members will not be put in a position of having to jeopardize family relationships when making necessary decisions.  The corporate trustee is likely to be more capable of maintaining adequate records, including accounting for the receipt and disbursement of income and principal from the trust.  This will make the filing of tax returns more efficient.  A corporate trustee will keep up to date on the changing tax laws and trust reporting and administration requirements.
  • Foundation: It is important to remember that, over time, age or illness could potentially prevent your individual trustee from performing his or her duties.  Although a successor trustee could also be named in your trust agreement, having the stability and continuity that a corporate trustee will provide, may be a preferred option.  Continuity is particularly important if you establish trusts that could be in place for multiple generations.
  • Objectivity: Personal relationships can sometimes become strained.  Even with a carefully drafted trust that sets out your intentions, a child or friend may not be able to act with objectivity and might find themselves in the midst of a dispute.  You do not want family members or friends pitted against one another.  Likewise, you do not want a family member who is too soft and is easily persuaded to make bad investments or distributions.  A corporate trustee is there to make decisions free from bias or influence from family or friends.
  • Confidentiality: You might value privacy and desire that the details of your trust be kept a secret.  You might not want others to find out the value or mechanics of the trust.  It is much more likely that a corporate trustee will keep your secrets and adhere to your wishes.

What About Fees?

Corporate trustees will charge fees, but so might individual trustees.  You could have an individual charging identical fees while doing an inferior job.  The expectation is that the corporate trustee fees charged will be made up through superior investment performance, tax savings, dispute avoidance and generally managing the trust more efficiently.

Trust Protector Solution:

You can get the professionalism of a corporate trustee with family involvement and oversight.

The trust protector can be named in addition to the corporate trustee.  The trust protector can oversee the actions of the corporate trustee, receive monthly statements and interact with trust beneficiaries to make sure they are being treated fairly.  The Trust Protector can be a friend or family member with a more personal feel for the situation.  While the Trust Protector does not have to handle the day to day responsibilities of the Trustee job, they have the ability to make sure that the Trust is working as intended for the beneficiaries.

Trust Protector Powers:

The trust protector is typically given the power to remove and replace a corporate trustee in case the corporate trustee is being unreasonable with distributions, charging excessive fees or investing poorly or improperly.  The Trust Protector can also be given the power to fill trustee vacancies.  Importantly, a Trust Protector can be given the power to modify the terms of a trust if there is a law change and something unforeseen impacts the personal lives of the beneficiaries.


So, you could potentially get the best of both world through the use of a corporate trustee and trust protector combination.  Many of our clients have used this combination successfully to get professional management with personal attention.


Some of the other most common planning tools and considerations are:  Creation of Last Will & Testament, Creation of a Medicaid Asset Protection Trust, use of a Medicaid Compliant Immediate Annuity, qualification of the Family Caregiver Exception, creation of the Caregiver Agreement, Irrevocable Burial Reserve, Monthly Gifting Exception, Elder Law Friendly Financial Power of Attorney, Medical Power of Attorney, Living Will.

Check out our other great articles throughout this site that more specifically address the different ways to protect and preserve your assets.  Click here:  Other blog articles to check out!

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For assistance developing a comprehensive estate plan or nursing home asset protection plan in Pennsylvania, please contact Douglas L. Kaune, Esquire at (610) 933-8069 or: Email Doug Kaune.

Doug’s entire practice is focused on elder law, Medicaid application, estate planning, trust planning, estate administration and protection of clients’ assets from nursing home spending and estate and inheritance taxation.

Unruh, Turner, Burke & Frees, P.C. is a full service law firm which has three convenient office locations in Phoenixville, West Chester and Paoli, Pennsylvania. The firm primarily services clients in Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties, but can represent clients throughout Pennsylvania.

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