As you start seeking financial security and independence, you’re bound to amass assets along the way. With various ways to secure your wealth and properties, you’ll probably get a lot of headaches going over all your possible options.
This process can be overwhelming when you have no prior knowledge about handling these kinds of commitments. Fortunately, enlisting the help of a corporate trustee can enlighten you and significantly reduce the weight of your financial responsibilities.
The Corporate Trustee: What is Their Role?
If you’re new to the world of wealth management, you may wonder: what is a corporate trustee and what exactly are their roles?
To have a better understanding of what they do, it’s important to first think of where your assets will eventually go when you die or when you choose to release them. Usually, assets go to your family, your chosen charities, or the government.
Creating a trust ensures that your assets will go to the people or entities of your choice. Upon creation, the trust owner usually names someone as their trustee, who assumes legal ownership over the trust. The trustee can either be an individual (individual trustee) or a corporation (corporate trustee).
Corporate trustees generally come from banks or trust companies. They’re often sought out by people whose trust contents require a manager who’s experienced in dealing with complex financial matters.
The Duties and Responsibilities of a Corporate Trustee
Once a corporate trustee has been selected, they’re either appointed as a sole trustee or as a co-trustee to another individual. Oftentimes, the co-trustee is a member of the owner’s family.
Listed below are some of the basic responsibilities of a corporate trustee:
- Protects Assets
The primary task of a corporate trustee is to control and protect the trust assets of their client. Not only do they keep their clients in the know about their processes, but it’s also their responsibility to keep the client’s beneficiaries informed of the significant facts regarding the trust.
This ensures that the people involved know the necessary information that would help them protect their various interests. In line with this, they must also act solely for the benefit and interests of the beneficiaries. While the trust is in their hands and they have the power to let it grow, ultimately their decisions must not be based on something self-serving.
- Enforces and Defends Claims
When huge amounts of wealth and assets are involved, you can expect things to be complicated—especially when various parties are interested in what’s “up for grabs”. In such instances, claimants will do whatever they can to validate their claims.
Fortunately, a corporate trustee is there to make sure that all the trust’s claims are properly enforced. They will also defend any claims that a party may make against the trust. In a way, you can think of trustees as an added security measure to a safety vault.
- Grows Your Investments
One of the ways that trustees earn is through compensation based on your assets’ worth. Hence, this is usually their main motivation to grow your investments because they get to earn when you earn.
They are usually required to work under the “prudent investor rule” unless the trust terms say otherwise. This rule requires your corporate trustee to properly exercise their knowledge and apply caution when managing and investing your trust assets—in the same way that a prudent investor does.
It becomes the corporate trustee’s task to invest and reinvest your trust assets. They also hold the responsibility over the capital and the income of your investments.
- Prevents Conflicts
Corporate trustees must deal impartially with every beneficiary of the trust. This means that they have the significant task of preventing any conflicts of interest from arising.
Every decision they make must be carefully considered, especially if they think that it’s subject to scrutiny by beneficiaries. Hence, they must ensure that they remain fair in all of their dealings and transactions. They must also be able to defend the rationales of their decisions should the beneficiaries ask for clarifications.
Conclusion: Let Go of Your Asset-Related Worries with a Corporate Trustee
Having a corporate trustee can lessen the financial burdens that you have to carry, especially if the contents of your trust are rather complicated. And since trust assets are typically separated from your other assets, they’ll remain safe even if the trust company or bank eventually collapses.
As an objective third-party, a corporate trustee doesn’t have any emotional attachment to your trust. Thus, they can simply proceed with their responsibilities and make decisions based on your best interests.