Those seeking to set up a trust in New York have many more options than their nationwide peers when it comes to choosing a trustee. New York offers a unique and varied concentration of financial service institutions that is unlike anywhere else in the world.
However, your trustee need not be a powerful financial services company. Trustees can range from a close family member, friend, a multinational bank, New York City estate planning lawyer or anything in between. Each type of trustee has potential advantages and disadvantages. The following are considerations to keep in mind when selecting a trustee.
First and foremost, a trustee must be able to competently handle the duties of the trusteeship. This is not to say that a corporate trustee is automatically more competent, because the corporate trustee typically lacks the personal knowledge about the person who set up the trust. The private trustee, having been a close friend or a member of the family, is often more informed about the trust owner’s personal preferences.
The main advantage of a corporate trustee is the likelihood that the corporate trustee has the resources to specialize in many of the fiduciary responsibilities incumbent of trustees. Corporate trustees typically have particular knowledge in areas such as investment, taxes, record keeping, and regulatory compliance, which make their service appealing to many who are establishing a trust. Corporate trustees are not subject to family biases or prejudices and have little incentive to engage in practices that would favor one trust beneficiary over another.
Some of the main drawbacks to corporate trusteeship are the impersonal nature of the relationship and the potential inflexibility of the corporate trustee in distributing assets to the trust beneficiaries. Corporate trustees may interpret the provisions of the trust more strictly, potentially denying the distribution of assets to beneficiaries in cases of emergency. By contrast, private trustees typically have more reliable and personal contact with living trust owners, and are able to draw on this personal contact in their administration of the trust. If the trust owner happens to be deceased, the private trustee is more capable of anticipating the attitudes that should govern the administration of the trust, drawing on their previous personal interactions with the deceased. Private trustees are, therefore, more flexible as the needs of the beneficiaries arise.
Some of those who establish trusts elect to appoint a group of trustees and to delegate authority amongst them according to their particular strengths. In such an arrangement, the corporate co-trustee may be entrusted with some of the more technical aspects of the administration of the trust, while the private trustee may handle some of the more ambiguous decision-making duties. An advantage of a co-trustee arrangement is the inability of any of the trustees to act unilaterally, ensuring that the possibility of theft, fraud, or mistake is dramatically reduced.
A New York trust and estate attorney can help guide your decision in this important endeavor. The considerations in the appointment of a trustee can often be much more complex than listed here. The right legal professional can help you navigate this difficult decision.
New York City Trusts and Estates Lawyer Jules Martin Haas, Esq. has been representing clients in Probate and Estate Administration proceedings throughout the past 30 years. He is available to help residents in many areas, including Manhattan, Queens and Brooklyn. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation or e-mail me at firstname.lastname@example.org.