1. Regulation and oversight
A corporate trustee’s actions are reviewed both internally by its own compliance group, and by state and federal banking regulators. Further, most courts hold corporate trustees to higher standards than individuals because they are considered professionals.
2. A broad array of services
A corporate trustee has fiduciary and investment specialists on staff as well as advisors that deal with nonfinancial assets. These professionals bring experience, which helps them identify opportunities to improve trust functions, like making certain tax elections or petitioning the court for instructions when needed.
Corporate trustees can be used to make unpopular decisions that individuals might have a harder time with, like telling a beneficiary “no” to a distribution request.
Trusts are often long-term, multigenerational structures. A corporate trustee provides continuity of trust administration, unaffected by incapacity or death.
5. Investment management expertise
Trustee investments are governed by state statute and almost always require a “modern portfolio theory” (or “total return”) approach. Corporate trustees use this approach in a disciplined manner.
Trustee selection is a critically important — sometimes the most important — part of the estate planning process.