Corporate Trustee 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 if it acts as your corporate trustee. A trust is a legal document that allows you to plan your estate and control your assets, plan for the possibility of physical or mental incapacity, and distribute your assets at death. When you set up a trust, you will name someone, called a trustee, to manage the assets your trust controls.

Will I lose control if I use a corporate trustee?

No, if you have a revocable trust you can change your trustee at any time and for any reason. Even with an irrevocable trust, you or your beneficiaries may have the right to change the corporate trustee. Since a trust is a binding legal contract, the instructions you put in your trust while living must be followed by the trustee you select.

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.

Can I name a friend or relative as trustee instead?

Of course; however, this may not be the best choice. They may be too busy with their own affairs, may live far away, may not get along with other family members, or may lack the experience to manage the trust assets or to act as a fiduciary for the trust’s beneficiaries. One option is to have a relative and a corporate trustee work together. This would give you the professional experience of a corporate trustee and the personal involvement of someone you know.

Should everyone use a corporate trustee?

A corporate trustee is not for everyone, but it is something everyone should consider. You need to look objectively at your situation. If you have a modest estate and your trust is fairly simple, you may be fine being your own trustee and having a capable family member step in for you when you can no longer manage your assets If your estate is larger, has a variety of assets, and includes tax planning, or if you doubt your relatives’ capabilities or intention, definitely consider a corporate trustee.

Are there disadvantages to using a corporate trustee?

The bank must objectively follow the instructions for the trusts they manage; therefore, some beneficiaries have found them to be uncooperative. However, that may be exactly what you want. Many trusts are established to provide direction to the trustee regarding when, and under what conditions, distributions are made to a beneficiary. If you are concerned about a corporate trustee being too impersonal, you can always name a family member or close friend to act as a co-trustee.

Is a corporate trustee expensive?

Most are very reasonable, especially when compared to other investment managers or brokers. A corporate trustee will provide personal asset management and individualized services such as: bill paying, tax planning, help in gifting, help in finding housekeeping or personal care services and planning for pets, all for a small percentage of the value of the assets they manage for you. Because a corporate trustee’s fee is based on the assets under management, and not the number of trades made, the trustee is motivated to help you grow your assets Fees are charged according to a published fee schedule. You know exactly what you are paying and a portion of the trustee fee may be tax-deductible.

*Oregon Pacific Bank’s trust department offers products that are not FDIC insured, are not guaranteed by the Bank, and are subject to loss of principal

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