One person rarely brings all the skills required to successfully manage a complicated trust, but a corporate trustee can help you cover your bases.

Finding a trustee can be one of the more challenging parts of creating a trust. The basic tasks are demanding enough, including overseeing investments, managing tax filings and, when necessary, liquidating assets. But for wealthy families, a trustee’s responsibilities can extend much further.

Wealthy investors often create complex, purpose-built trusts or utilize provisions that vest the trustee with broad, discretionary powers. Consequently, these trust creators — called grantors or settlors — need to choose a trustee who can make complex or difficult decisions with confidence. Additionally, the beneficiaries of the trust (i.e., the individuals the trust is intended to benefit), can have strong opinions on how a trust ought to be run — often in no small part because their livelihoods stand to be affected. A trustee must be sympathetic to these points of view while fulfilling the trust’s goals in accordance with the grantor’s intent.

All in all, few individuals possess the full raft of necessary skills. A close family friend may understand a grantor’s goals and have the respect of beneficiaries, but such a friend may lack the legal background to navigate relevant tax and trust laws. A grantor’s longtime attorney might have the expertise and impartiality to flawlessly execute the trust’s mission but might not have the time or patience to walk beneficiaries through complex administrative matters or help them understand the trustee’s decisions.

Fortunately, grantors don’t have to use an individual trustee to meet all these needs. Many grantors have turned to corporate trustees, either to act together with individual trustees or to serve as a standalone trustee. A corporate trustee is just what it sounds like — a business entity that administers a trust. While the corporation is appointed as the trustee, its employees carrying out the trust administration functions.

There are manifold benefits to this approach. A corporate trustee’s team of specialists can offer a depth of knowledge across many fields, limiting the potential for costly surprises and the need for additional external advisors. It’s also generally removed from the grantor, the beneficiaries and the trust itself, helping limit partiality and conflicts of interest. And corporate trustees benefit from their institutional structure — they are designed to outlast any one staff member, offering continuity over the life of the trust as well as internal checks against corruption and self-dealing.

A multifaceted team can help cover multiple bases — including complicated interpersonal interactions.

One of the most difficult parts of being a trustee is the sheer breadth of the task. Even when a trustee is empowered to hire third parties for technical tasks or advice — e.g., attorneys to navigate laws, accountants to handle taxes, investment professionals to help craft the portfolio — they still need to understand what’s being done, exercise oversight and make the high-level decisions.

A corporate trustee can cut through much of that clutter. It brings a body of specialists to bear, collectively giving it a firmer grasp of the issues than most individuals could ever hope to have. That depth of knowledge, paired with preexisting relationships, can be leveraged to handle many technical tasks that an individual might need to contract out, often at no additional cost. And there’s a hidden benefit of such holistic intelligence — overlapping review and extensive collective experience can go a long way toward foreseeing and handling difficulties before they become crises.

These tools aren’t limited to technical skills; corporate trustees can play a critical role in the sometimes-delicate work of helping beneficiaries make sense of the trust. Even a small dose of financial education on topics such as portfolio construction, wealth planning and the mechanics of the trust can go a long way toward reducing friction with and among beneficiaries.

In that vein, a corporate trustee can bring valuable neutrality to the trust’s management. Individuals, particularly ones with longstanding relationships with the beneficiaries, can be prone to partiality or even favoritism. A corporate trustee team is less likely to be swayed by such bias, and that can help produce more data-supported decisions that are focused on the overall health of the trust.

Corporate structure can offer a measure of security.

Even the most competent individual trustees will eventually have to step down due to time constraints or advancing age, and that’s a major concern for longer-term trusts. Trusts that are created and funded to benefit multiple generations often last several decades, and some U.S. states have provisions allowing such trusts to last for centuries. In these cases, it’s almost certain that an individual trustee simply won’t be around to see the trust through to dissolution.

That can create continuity issues. Subsequent individual trustees might not have access to the grantor or other parties that can put the plain text of the trust documentation into context or offer guidance as to what the grantor intended with their language. Poor note-taking or missing records can compound this issue, depriving future individual trustees of anything beyond the legalistic language on the page of the trust itself.

In contrast, corporate trustees are resilient to individuals leaving and tend to have strong recordkeeping practices. Similarly, corporations are subject to deep layers of regulation and employ strong internal protections against bad actors, which can offer additional defense against self-dealing or worse behavior. Together, these characteristics can help produce long-term administration that is consistent with the grantor’s vision.

Capital Group Private Client Services can help you manage your trust.

If you’re searching for a corporate trustee, we can assist. Capital Bank and Trust Company, a federally chartered bank, can serve as trustee, and our team can oversee ongoing trust administration, including reviewing the trust itself to uncover possible efficiencies. And it may go without saying, but Capital’s historic focus on investment management gives us an unusually deep understanding of investing compared to some other corporate trustees.

Orginially published in our Summer 2024 Quarterly Insights magazine.