Corporate Trustees Verses Individuals

THERE ARE ADVANTAGES AND DISADVANTAGES TO CHOOSING AN INDIVIDUAL OR A CORPORATION AS YOUR TRUSTEE. AND IF YOU CHOOSE A CORPORATE TRUSTEE, NOT ALL CORPORATE TRUSTEES ARE ALIKE.

You are free to choose anyone as the trustee of your trust, and frequently an individual is chosen to act as trustee.  That individual may be yourself during your lifetime, your spouse, a child or other relative, a friend of the family, or a professional advisor, such as your attorney or accountant.

The advantages that may exist in having an individual act as your trustee are:

• Likely to have personal knowledge, if it is a family member or close friend

• Greater ability to influence those to whom distributions are given

• Aware of changing circumstances over time

• Less expensive

The disadvantages that may exist with an individual trustee are:

• Lack of investment experience

• Need to incur expenses for outside experts, such as accountants and attorneys

• Possible strains on family relationships or friendships caused by decisions made

• Perception that beneficiaries may influence the decision maker

The use of a corporate trustee, such as Providence First Trust Company, is best evaluated by considering the issues and problems that will arise after the passing of the creators of the trust, when only the beneficiaries are there to monitor the trust and its distribution.  Positive characteristics of a corporate trustee in that situation are:

• In-house experience and expertise in tax, law and investing

• Perceived fairness, uniformity, and lack of bias in decisions

• Assurance of compliance with instructions and agreements through government regulation

• Resources available to administer complex issues

All corporate trustees are not alike, and Providence First Trust Company represents a unique company in the financial industry, specializing solely in personal trusts of individuals and families.  This specialty is necessarily limited to local clients, and results in much less assets under management than large banks that handle corporate trust work, such as pension plans and stock options plans.  

If you choose to have a corporate trustee, you face the next decision of choosing the right kind of corporate trustee.  Call us at Providence First to arrange a personal meeting to help you make that important decision.

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