What Are the Benefits of a Professional Trustee?

When it comes to managing your wealth and assets, the importance of finding a professional you can trust cannot be overstated. This is especially true when you’re considering establishing a trust, a key financial instrument used for preserving and distributing assets over time. 

In this article, we’ll explore the many benefits of having a professional trustee, such as a bank, oversee your trust. Professional trustees bring a wealth of experience, knowledge, and impartiality to ensure your financial legacy is safeguarded, and your wishes are faithfully executed.

10 Benefits of Using a Professional Trustee

The decision to use a professional trustee is a pivotal one, bearing far-reaching implications for your financial legacy and the well-being of your beneficiaries. Here are 10 compelling benefits that come from entrusting your assets and estate to the expertise and fiduciary care of a professional trustee.

Benefit #1: Expertise and Experience

Professional trustees have a deep understanding of the intricate and ever-evolving world of trust and estate law. They are well-versed in the complexities of tax regulations, investment strategies, and fiduciary responsibilities. This level of expertise ensures that your trust is administered in full compliance with the law, optimizing its financial performance and minimizing potential risks.

Benefit #2: Unbiased Decision-Making

One of the primary benefits of using a professional trustee is their impartiality. They have a legal duty to act solely in the best interests of the beneficiaries, without any conflicts of interest. This impartial approach ensures that trust assets are managed without bias, personal gain, or favoritism, providing peace of mind to all involved parties.

Benefit #3: Consistency and Continuity

A professional trustee provides stability and continuity in trust administration. Their existence isn’t tied to an individual’s lifespan or circumstances, reducing the risk of disruptions due to events such as illness, incapacity, or death. This is particularly valuable for trusts intended to last for generations.

Benefit #4: Rigorous Record-Keeping and Reporting

Professional trustees maintain meticulous records and provide transparent reporting to beneficiaries. This level of accountability ensures that all transactions and decisions are well-documented and can withstand legal scrutiny. Beneficiaries can have confidence that the trust’s assets are being managed with transparency and accountability.

Benefit #5: Investment Expertise

Local banks and professional trustees often have access to a wide range of investment opportunities and financial instruments. They can leverage their investment expertise to make informed decisions that aim to maximize returns while managing risk. This professional approach can lead to better financial outcomes for the trust and its beneficiaries.

Benefit #6: Estate Tax Planning

Effective estate tax planning is essential for preserving wealth and minimizing tax liabilities. Professional trustees have the knowledge and resources to develop and implement tax-efficient strategies, potentially saving the trust and its beneficiaries substantial sums in taxes over time.

Benefit #7: Legal Compliance and Risk Management

Trusts are subject to a myriad of legal and regulatory requirements. Professional trustees are well-versed in these rules and regulations, ensuring that the trust remains in compliance at all times. They also help manage and mitigate various risks associated with trust administration, reducing the potential for legal disputes.

Benefit #8: Conflict Resolution

In situations where conflicts arise among beneficiaries or between beneficiaries and the trustee, professional trustees can act as neutral mediators. Their experience in conflict resolution can help maintain family harmony and ensure that trust assets are distributed fairly and in accordance with the trust’s terms.

Benefit #9: Efficiency and Administration

Professional trustees have well-established administrative processes and systems in place. This efficiency not only streamlines trust management but also helps reduce administrative costs, which can be especially important for smaller trusts.

Benefit #10: Peace of Mind

Ultimately, having a professional trustee provides peace of mind. Knowing that your financial legacy is in the hands of experienced professionals who are legally obligated to act in your best interests and those of your beneficiaries can alleviate worries and allow you to focus on other aspects of your life and financial planning.

Can I be my own trustee?

While it is possible for an individual to act as their own trustee of a trust, there are certain important considerations and potential limitations to keep in mind.

A trust is a legal entity established to hold and manage assets on behalf of a grantor and its beneficiaries. The trustee is the person or entity responsible for managing the trust’s assets and ensuring that the trust’s terms and objectives are adhered to. In some cases, the trust agreement may allow the grantor (the individual creating the trust) to also serve as the trustee. This is commonly referred to as a “self-trusteed” or “grantor-trustee” arrangement.

Pros of being your own trustee:

• Control: Being your own trustee allows you to have direct control over the trust’s assets and how they are managed.
• Flexibility: As the trustee, you have the ability to make decisions regarding investment strategies, distributions, and other trust-related matters.
• Cost savings: By acting as your own trustee, you may avoid paying trustee fees to an external party, potentially saving on administrative costs.

Cons of being your own trustee:

• Fiduciary responsibilities: As a trustee, you have a fiduciary duty to act in the best interests of the beneficiaries. This means making decisions solely for the benefit of the beneficiaries and not for personal gain. Failure to fulfill these duties could lead to legal consequences.
• Conflict of interest: Being your own trustee may create potential conflicts of interest, especially if you are also a beneficiary of the trust. Balancing your interests with those of other beneficiaries can be challenging.
• Compliance and reporting: Trustees have legal and tax-related responsibilities, including filing tax returns and complying with relevant regulations. Being a self-trustee means taking on these obligations yourself.
• Professional expertise: Depending on the complexity of the trust and the assets involved, managing a corporate trust may require specialized financial, legal, and accounting knowledge. Hiring professionals might be necessary to ensure compliance and efficient management.
• Succession planning: If the trust’s assets need to be managed beyond your lifetime or in case of incapacity, a contingency plan should be in place to appoint a successor trustee.

Before deciding to act as your own trustee for a corporate trust, it’s crucial to consult with legal and financial professionals experienced in trust law. They can help you understand the legal implications, potential risks, and responsibilities involved in this role. If the trust is intended to have multiple beneficiaries or complex asset management requirements, it might be advisable to consider appointing a professional trustee or co-trustee to ensure efficient administration and protect the interests of all beneficiaries.

Putting it all together

The benefits of having a professional trustee, such as Norway Savings Bank, overseeing your trust are numerous and significant. Our expertise, impartiality, and commitment to legal compliance ensure that your financial legacy is preserved, your wishes are carried out faithfully, and your beneficiaries are well taken care of.

Bottom line? When considering the establishment of a trust, it’s essential to consult with a trusted financial advisor and legal counsel to determine the best trustee for your specific needs, ensuring a secure and prosperous future for you and your loved ones.

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.