Atlanta Financial Blog

Benefits of Professional Trustees

Benefits of Professional Trustees

Michelle T. Thompson, Esq., CFP®, CTFA, CDFA®
October 1, 2019

What is a professional trustee?

When you set up a trust, you must name a trustee to manage and administer the assets in your trust. Generally, professional trustees are experienced individuals that work in a trust department in a bank or in a trust company.

Do you need a professional trustee?

In determining whether you need a professional trustee, consider the following:

  • Family dynamics: Is this a blended family situation? Are you living with a non-related party? Is there a history of litigation or contentiousness between family members? Are there family members who cannot manage money?
  • Complicated Administration: Can your family members handle the accounting and record keeping demands? Is there a complex disposition of assets? Do you have difficult tax situations?
  • Special Assets: Is there a closely held business? Is there non-residential real estate?
  • Burden Factor: Does your family have the necessary financial awareness, astuteness, and acumen?

If any of the above-mentioned situations apply to you, the possibility of appointing a third-party trustee should be considered. Third-party trustees offer many benefits, including:

  • A professional trustee exercises independent judgment and discretion to reduce contention among the beneficiaries. This is especially important in blended families.
  • A professional trustee typically has years of experience in the legal, tax, and administrative duties of executer and trustee. Doing it right the first time could save money in the long run.
  • A professional trustee provides long term succession and oversight for trusts which will be around for a long time. Unlike an individual, a professional trustee has a continuing existence; death or disability will not interrupt service to you or your family.
  • A professional trustee has a duty to ensure that the trust assets will be properly invested consistent with prudent investor standards.
  • A professional trustee frees you and your family from day-to-day administration tasks.

A professional trustee can serve you in a number of ways. For example, if you do not have the time, desire, or experience to manage and administer the trust yourself, you can name a professional trustee to take over the responsibility of managing the trust and overseeing investment management, pursuant to your wishes. Furthermore, if you want to take advantage of a professional trustee’s experience but still be involved, you can designate yourself as trustee and a professional as co-trustee. Additionally, if you want to be the trustee of your trust initially, but want to leave the responsibilities to professionals when you are no longer able to manage the trust, you can name a professional trustee as a successor trustee.

In our experience, families oftentimes struggle with selecting the best and most qualified person to act as trustee. Remember to always consider potential conflicts that could arise between family members. If you are struggling with this decision, call me at 678-282-0296 to discuss.

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