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wealth management
trust Q & A

What is a Corporate Trustee?

A corporate trustee is a bank trust department or trust company. The bank can help you build, manage and protect your wealth when it acts as your corporate trustee. A trust is simply a legal document that allows you to plan your estate and to control your assets while you are living, to plan for the possibility of physical or mental incapacity and to dispose of your assets at death. When you set up a trust, you will need to name someone, called a trustee, to manage the assets your trust controls. While you may choose yourself or just about any other adult, there are some very good reasons why you should consider a corporate trustee.

Why Would I Use a Corporate Trustee?

You will gain the advantage of years of experience. Because the bank manages trusts on a daily basis, it is familiar with proper trust administration, tax and estate planning strategies and the legal responsibilities of a trustee.The bank can manage the assets in your trust now and/or after you die, as your trust directs. The bank can buy and sell assets, pay bills, file tax returns, maintain accurate records and distribute income. The bank has experience managing a variety of assets, including stocks and bonds, real estate, closely held businesses, mineral properties and collectibles.

You will receive professional investment advice. A corporate trustee gives its full attention to managing trust assets. After discussing your financial goals, risk tolerance and long-term objectives, the bank will recommend the best investment strategy for you. Then, depending on how involved you want the bank to be, it can provide ongoing advice, or even make decisions for you, ensuring your investments stay on track and enabling you to meet your financial goals.

You will protect your wealth because corporate trustees are regulated by internal auditors and both state and federal agencies. Courts also consider the bank an “expert” and expect it to meet higher standards than a nonprofessional.

You will receive reliable, professional service. A corporate trustee will not become ill, die, get divorced, go on vacation or retire.

You will value their objectivity. The bank will follow your trust instructions objectively and faithfully, something that may be hard for family members to do.

You will tap into rich sources of advice and referrals. The bank can provide advice on investment, tax, retirement and estate- planning issues and can refer you to attorneys and other qualified professionals as needed.

You will enjoy peace of mind.

When Would I Use a Corporate Trustee? Irrevocable Trusts. If you set up an irrevocable trust (like a charitable or life insurance trust) or you plan to make gifts in trust, you may want to name someone other than yourself as trustee. A corporate trustee is a natural choice to make sure your irrevocable trust is administered properly.

Revocable Living Trusts. If you set up a revocable living trust you will avoid a probate when you die and prevent court involvement should you become incapacitated. There are many benefits to naming a corporate trustee in your trust document:

• As Trustee: As trustee, a corporate trustee has full responsibility for managing your trust assets according to your instructions. This would be an excellent choice if you are elderly and have no one you can trust to take care of your financial affairs. You may be widowed, have no children or other trusted relatives living nearby (or do not want to burden them), or you and your spouse may be in declining health. Even if you are capable of managing your own trust, a corporate trustee can be a wise choice. You may not have the time, desire or investment experience to manage your assets. Or perhaps you just feel that someone with more time and experience could do a better job than you.

• As Co-Trustee: If you want to take advantage of a corporate trustee’s investment experience but still be involved, you could have the bank work with you as a co-trustee. Developing a working relationship with a corporate trustee now lets the bank become familiar with your objectives and your beneficiaries’ needs and personalities, while you are still around to provide guidance and input.

• As Investment Agent: You could name a corporate trustee as your agent. While a co-trustee has equal responsibility with you, an agent can have as much responsibility as you wish. You can have your agent manage only a portion of your trust’s assets (your stocks and bonds, for example) or just provide you with investment advice, with you making all final decisions.

• As Successor Trustee: If you decide to be your own trustee, consider naming a corporate trustee as your successor trustee. In this capacity, the bank will step in and manage your trust for you when you can no longer act due to incapacity or death. Many people like the idea of having a professional take care of the paperwork, tax filings and other final details.

How Safe Are Trust Assets? Trust assets are safe even if the bank should fail. By law, trust assets must be kept separate from all other bank assets. For example, they cannot be loaned out, mixed with the bank’s own assets or used to satisfy its creditors. You are protected against fraud, theft or any error made in the administration of your trust by regulatory oversight provided by internal, state and federal examiners.