When it comes to setting up a trust, choosing the right trustee is a critical decision that can impact the success of your estate planning goals. The trustee is responsible for managing the trust assets, making investment decisions, and distributing the assets to the beneficiaries according to the terms of the trust.
The choice between a national big player firm or a local boutique firm, as well as self-appointing as the trustee, each have their own set of advantages and disadvantages. In this article, we will provide practical tips to help you make an informed decision and recommend the best setup for a trust that combines the expertise of a professional team and the oversight of a trusted family member.
National Big Player Firms
National big player firms are typically large and well-established financial institutions that offer a range of trust and wealth management services. They have the resources, expertise, and infrastructure to handle large and complex trusts, making them a good choice for those with significant wealth and complex financial needs.
Advantages of choosing a national big player firm include:
- Extensive experience and expertise: These firms have a wealth of experience and expertise in managing trusts and portfolios, and can provide the specialized knowledge and resources needed to handle complex financial situations.
- Wide range of services: National big player firms often offer a wide range of trust and wealth management services, making it easier to find a complete solution that meets all of your needs.
- Established reputation: These firms have a long history and a well-established reputation, which can provide peace of mind for those who are concerned about trust and security.
Some examples of national big player firms include Bessemer, Whittier, Northern Trust, JP Morgan and Goldman Sachs.
Local Boutique Firms
Local boutique firms are typically smaller and more specialized than national big player firms. They are often family-owned and operated, and have a more personal and hands-on approach to serving their clients.
Advantages of choosing a local boutique firm include:
- Lower fees: Local boutique firms are often able to offer lower fees for their services, which can be especially attractive for those who are looking to minimize the cost of trust administration.
- Dedicated point of contact: With a local boutique firm, you are likely to have a dedicated point of contact who can answer your questions and provide personalized support. This can be especially valuable for those who prefer a more personal approach to their financial matters (similar to personal financial advisors).
- Close-knit community: Many local boutique firms have a close-knit community of clients, which can make it easier to build relationships and communicate effectively with the trust administration team.
- All services under one roof: Some local boutique firms offer a complete suite of trust and wealth management services under one roof, making it easier to find a comprehensive solution that meets all of your needs.
Appointing Yourself as Trustee
Legally you can appoint yourself as the Trustee of any trust you create, whether it is a revocable or irrevocable trust. You can use the allowable trustee fees to hire a very good T&E attorney, bookkeeper, assistant, and CPA to advise you if you have the time and expertise.
Self-appointing as the individual Trustee of your own trust can have its advantages, such as having complete control over the trust assets and being able to make decisions without having to go through a third party.
However, it also requires a significant amount of time and expertise to properly manage the trust and make sure it's in compliance with all legal requirements. If you choose to self-appoint, you should be prepared to spend a considerable amount of time on the administration of the trust and have a good understanding of trust and estate laws, tax laws, and investment strategies around the investable assets you hold.
Additionally, it's important to consider that being the Trustee can also be a liability. As the Trustee, you're responsible for managing the trust assets, making investment decisions, and distributing the assets to the beneficiaries according to the terms of the trust. If you make a mistake, you could be held personally liable, which can be costly.
In most cases, it's recommended to hire a professional or corporate trustee, such as a trust company or bank, to handle the administration of the trust. These organizations have the experience, expertise, and resources to properly manage the trust and ensure that it's in compliance with all legal requirements. They also provide a level of accountability and can help protect you from personal liability.
The recommended setup for a trust, according to our discussions with several high net worth individuals and ultra high net worth Kubera subscribers, is to have a combination of a professional team and a trusted family member. The professional team would consist of experts in the field of trust and estate management such as a trustee, an attorney, a bookkeeper, an assistant, and a CPA. This team would handle the day-to-day administrative responsibilities and make sure the trust is managed efficiently and effectively
On the other hand, the trusted family member would be in an oversight position as a Trust Protector. Their role would be to keep a watchful eye on the professional team and make sure everything is running smoothly. However, they wouldn't be involved in the nitty-gritty of the trust administration, allowing them to focus on their own personal life.
The benefit of having a trusted family member in this oversight role is that they have the power to make important decisions if any issues arise, such as firing the acting trustee. This provides an extra layer of security and protection for the trust assets and beneficiaries. In addition, having a trusted family member involved in the process can also help to maintain a sense of continuity and ensure the trust aligns with the original goals and intentions of the grantor.
In conclusion, selecting a trustee who is right for your trust is a crucial decision that can significantly impact the success of your estate planning goals. There are three main options available: national big player firms, local boutique firms, and self-appointing as the trustee. Each option has its own set of advantages and disadvantages that should be considered when making the decision.
While appointing oneself as the trustee may provide complete control and decision-making power, it also requires a significant amount of time, expertise, and understanding of legal and financial matters. This makes it an option that is better suited for individuals with experience in these areas and the willingness to devote the necessary time.
For those seeking a more balanced approach, our recommended setup is a combination of a professional team and a trusted family member. The professional team, consisting of experts in the field of trust and estate management, would handle the day-to-day responsibilities and ensure the trust is managed efficiently and effectively. Meanwhile, the trusted family member, serving as a Trust Protector, would be in an oversight position, keeping a watchful eye on the professional team and providing an extra layer of security and protection for the trust.
Ultimately, the best setup for your trust will depend on your individual needs, goals, and comfort level. By considering the advantages and disadvantages of each option and seeking the guidance of a financial expert, you can choose the right trustee and set yourself up for a successful estate plan.
Kubera Keeps Your Trust Safe for Your Heirs
In 2020 and beyond, just as important to your estate plan as your trust will be the digital vault you use to securely store and seamlessly share it with beneficiaries.
This modern need is exactly why we created Kubera — the most modern wealth and beneficiary management platform.
Kubera enables users to track and manage all of their assets — from traditional assets like investments, cash, and real estate to cutting-edge digital assets including cryptocurrency, domains, and revenue-generating digital platforms — on one intuitive, secure platform.
In addition to assets, Kubera’s members can track and manage all their important legal documentation — such as that which goes into creating trusts and wills — using our unique beneficiary management feature that allows you to name an heir who will get access to your entire portfolio when you become inactive on your account.
Having a trust doesn’t just protect your future — it protects the future of your estate and the heirs that will use it to continue your memory.
Sign up for Kubera today and set your legacy up for success.