Unless it is their chosen profession, few individuals are experienced trustees. The staff of a corporate trustee is composed of experienced professionals, familiar with managing all types of trusts. They are knowledgeable in investments, accounting, tax and estate planning, as well as the duties of a trustee. So, why should you choose a corporate trustee such as Mission?
Responsibility
A corporate trustee is required by law to perform faithfully all of its duties and to follow the terms of the trust document to the letter. All employees are covered by a fidelity bond at no additional charge to the trust. An individual trustee is not always covered by a bond, and when one is covered, the cost of the bond, which may be substantial, is usually charged to the trust.
Full-time Attention
Individual trustees typically perform their duties only part-time, as an addition to their other personal and professional responsibilities. As a result, when conflicts arise, an individual trustee will often attend to personal priorities first to the detriment of the trust. An individual trustee may be unavailable from time to time. A corporate trustee is always available and devotes its full time and attention to the tasks required of a trustee.
Permanence
An individual trustee may not survive the trustor, may become ill, or may, for some other reason, be unable to act on behalf of the trustor or beneficiaries. With a corporate trustee, the trustor and beneficiaries are assured that a competent and experienced organization will always be ready to act when the time comes, even many years in the future.
Investment Experience
The investment decisions of any trustee of assets other than his or her own are measured against specific standards. In Arizona, these include the Prudent Investor Act. Most individual trustees are unfamiliar with the Act's requirements. Even hiring an outside investment advisor does not relieve the trustee of the ultimate responsibility of keeping investments in conformity with the Act. A corporate trustee's investment experience includes recognition of provisions of the trust and of the Act's requirements.
Group Judgment
With Mission as corporate trustee, experienced senior officers make all major decisions with respect to investments, sales, leases, mortgages and other property matters, as well as decisions relating to the exercise of discretion on behalf of beneficiaries as mandated in trust documents. By bringing together the knowledge and experience of a group of professionals, a corporate trustee can render more fully informed decisions.
Impartiality
An individual trustee may find it extremely difficult to be entirely impartial in making decisions as a trustee, particularly if that person is also a beneficiary. Other beneficiaries may criticize and express a lack of confidence in decisions made by the trustee. This often leads to family dissension and sometimes to the termination of lifelong relationships. A corporate trustee is impartial in decisions relating to the beneficiaries.
Record Keeping
An individual trustee may have difficulty maintaining appropriate records for the trust, which could result in losses to the trust and inadequate information about trust matters for the beneficiaries. A corporate trustee has a bookkeeping system in place to safeguard assets, to ensure accurate accounting of receipts and disbursements and to provide monthly or periodic statements to the beneficiaries.
Control
During their lifetimes, the trustors may retain control of the trust in one or more ways: (1) retain the right to approve or disapprove all contemplated investment changes; (2) retain the right to change corporate trustees; (3) retain the right to amend or revoke the trust and terminate the arrangements.
Regulation
As a corporate trustee, Mission is examined at least once a year by the Arizona Department of Financial Institutions. In addition, this regulatory agency requires annual audits performed by an independent auditor. Trusts administered by individual trustees are rarely subject to examination or external review.
Personal Liability
An individual trustee may be personally liable even for good faith conduct that falls short of legal standards. Pledged indemnification from trust assets may prove insufficient if the trust has been terminated or if remaining assets are limited. A corporate trustee can better avoid such liability and carries insurance as further protection.
Value
Unless otherwise specified in the trust document, every trustee, including an individual, is entitled to a reasonable fee for administering a trust. Because corporate trustees perform most needed services in-house and can negotiate lower costs such as reduced commissions on investment transactions, fees of a corporate trustee are highly competitive with those of an individual trustee. |
