Louisiana trustee

When a Corporate Trustee May Be Appropriate

People create trusts for lots of different reasons. A few reasons include putting assets in a living trust to avoid probate, providing that assets after death remain in trust to be doled out to children or grandchildren over time as opposed to in a lump sum, or leaving assets to a trust for a 2nd spouse and having those assets revert back to your children after the death of your surviving 2nd spouse.

Often, people who create trusts designate an individual to be the trustee, Successor trustee, or co-trustee. These individuals are often family members. But sometimes, people who set up trusts are more comfortable naming a corporate trustee because naming an individual or family member as trustee is simply not appropriate.

Perhaps you do not want to show bias toward one of your children by naming them as a trustee. Or perhaps because of the potential conflict between children and a 2nd spouse, you don't want to name one of them as a trustee. 

Some of the reasons that people have designated a corporate trustee are as follows:

(1) Experience. Corporate trustees often better understand trust provisions and trust law - more so than an individual that has never served as a trustee.

(2) Unbiased. An individual who is also a beneficiary of a trust may find it difficult to be biased in the administration of their duties as trustee. Corporate trustees can act with more bias.

(3) Accounting. Corporate trustees are capable of preparing and providing the necessary trust accounting, and, if necessary, the trust tax return preparation.

Note that corporate trustees typically require that the trust assets must meet or exceed certain values. If the trust assets are minimal, then an individual trustee who is willing to serve with little or no compensation may be your best or only option.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

What is a Trustee? Who Can Be a Trustee?

The trustee of a trust is the person who title to property has been transferred to so they can manage and administer it pursuant to the terms of the trust. The selection of trustee or co-trustees can be an important one.

A trust can have one or more trustees. In the typical married couple "probate avoidance" revocable living trust, the husband and wife are typically the initial co-trustees. Their powers to act jointly or individually may be described in the trust instrument. In the single person trust, typically that single person is the initial trustee.

Who can be a trustee? A trustee "can" be, generally, an individual, a bank, or a trust company. But in the Mom and Pop revocable living trust, typically the trustees are one or more individuals.

There are typically successor or backup trustees named. When Mom and Pop set up a revocable trust, they typically name themselves as the initial co-trustees. Then, after Mom and Pop die, one or more of the adult children are named as the Successor Trustee or Co-Trustees.

Trusts often provide a default provision so that if none of the named trustees can serve as trustee, then a corporate trustee gets appointed to serve as trustee. But that's only in the even that none of the named initial or successor trustees can or won't serve.