What It Means — and What It Costs
When creating a trust, one of the most important decisions you’ll make is choosing a trustee.
Your trustee is the person (or institution) responsible for:
- Managing trust assets
- Following the instructions in your trust
- Making distributions to beneficiaries
- Filing tax returns
- Keeping records and providing accountings
Many people automatically choose a family member. But in some situations, a corporate trustee — such as a bank or professional trust company — may be the better option.
Here’s what you should know.
What Is a Corporate Trustee?
A corporate trustee is a professional institution that is legally authorized to manage trusts. These organizations specialize in investment management, compliance, tax reporting, and fiduciary administration.
Unlike an individual, a corporate trustee:
- Does not become ill or pass away
- Does not play favorites
- Does not get emotionally involved
- Is regulated and professionally accountable
When a Corporate Trustee May Be a Smart Choice
1. Your Trust Is Large or Complex
If your trust includes:
- Real estate
- Investment accounts
- Business interests
- Special tax planning
- Long-term management for children
Professional management can reduce risk and mistakes.
2. You Want to Avoid Family Conflict
Unfortunately, money and grief can be a difficult combination.
If one child is named trustee over siblings, or if distributions are not equal, tension can develop quickly. A corporate trustee acts as a neutral third party and follows the trust document strictly — which can protect family relationships.
3. The Trust Will Last Many Years
If your trust is designed to:
- Support minor children
- Provide for a loved one with special needs
- Protect assets long-term
You may want the continuity of an institution that will still be there 10, 20, or 30 years from now.
4. You Don’t Want to Burden a Loved One
Being a trustee is more work than many people realize. It involves:
- Financial management
- Tax filings
- Record keeping
- Legal compliance
- Communication with beneficiaries
Some clients prefer not to place that responsibility on a family member.
When a Corporate Trustee May Not Be Necessary
Not every trust needs a corporate trustee.
If:
- The trust is modest in size
- Assets will be distributed quickly
- Your family gets along well
- Administration will be simple
A trusted individual may be perfectly appropriate.
What Do Corporate Trustees Charge?
Most corporate trustees charge a percentage of the assets they manage.
Typical annual fees range from:
0.75% to 1.50% of assets per year, often with lower rates for larger trusts.
For example:
- A $1,000,000 trust might cost approximately $7,500–$12,500 per year.
- Larger trusts often have reduced percentage rates.
Many institutions also have minimum annual fees.
Ask About Additional Fees
Some corporate trustees charge separately for:
- Tax return preparation
- Investment management
- Real estate oversight
- Special or “extraordinary” services
Before choosing a trustee, request a written fee schedule so you understand exactly how compensation works.
Is It Worth the Cost?
In the right situation, yes.
Professional management can:
- Reduce family conflict
- Prevent costly financial mistakes
- Ensure proper tax compliance
- Provide long-term stability
However, every family and estate is different. The right choice depends on your goals, your assets, and your family dynamics.
There Is No One-Size-Fits-All Answer
Some families choose:
- A corporate trustee alone
- A family member as trustee with a corporate co-trustee
- A corporate trustee as backup or successor
The key is making a thoughtful decision — not simply naming someone out of convenience.
If you’re creating or updating your estate plan and are unsure about trustee options, our office can walk you through the pros and cons based on your specific circumstances.
Making the right trustee choice today can prevent significant stress — and expense — tomorrow.
