January 24, 2020
Getting one’s affairs in order can seem like an overwhelming task, but choosing the right tools and professionals makes all the difference. Many people wish to set up trusts, which are legal documents that are drafted and put in place to manage assets for beneficiaries. Trusts make it possible to save money on taxes and legal fees.
To set up a trust, the owner must first name a trustee, which can be comprised of one or more people. Once an initial contract is signed, the trustee will be responsible for managing the trust; the owner can still maintain control of their assets while living, and if they become mentally or physically incapacitated. Trustees also sustain control after the owner passes away. A corporate trustee refers to a trust company or a bank trust department.
Individual versus Corporate Trustees
There are many reasons why asset owners choose certain individuals to serve as their trustees. Choosing someone they are familiar with, such as a relative or friend, can provide a sense of familiarity. However, it is not possible to predict what can happen to an individual trustee in the future, since that person could move away, retire, or pass away. Also, individual trustees may be held personally liable if there are any legal issues associated with the trust.
Corporate trustees serve as separate legal entities. They are in the business of managing trusts, so they will be more experienced with maintaining records, tax implications, and buying and selling assets, as well as distributing them. This experience can extend to international investing, stocks and bonds, farms, real estate, and other types of assets.
Pros and Cons of Using Corporate Trustees
Since corporate trustees are separate legal entities, they have limited liability. In addition, the trust’s assets and personal assets are held in different names, so separation becomes less complicated. If a new member of a corporate trust is introduced, they need to get appointed to the company. The disadvantages of having a corporate trustee should also be weighed and include the challenges of set up and keeping accurate records.
Assets can be dealt with more objectively when using a corporate trustee. Family members and friends may put their own interests first over time. Also, corporate trusts are regulated by federal and state agencies, and can recommend investment strategies and ongoing advice to best serve the owner’s long-term goals. Corporate trusts are a good choice for elderly individuals who do not have anyone they can trust to manage their financial affairs. These trusts are useful for administering irrevocable trusts.
Brooklyn Elder Law Lawyers at Korsinsky & Klein, LLP Help Clients Protect Their Wealth Through Corporate Trusts
Finding the best way to protect your assets for the future requires careful planning, and the Brooklyn elder law lawyers at Korsinsky & Klein, LLP can guide you in the best direction. Complete our online form or call us at 212-495-8133 for an initial consultation. Located in Brooklyn, New York, and Lakewood, New Jersey, we serve clients throughout Manhattan, Long Island, and Westchester, New York.