Trustee Selection: Private vs Professional Trust Companies

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When it comes to managing a trust, one of the biggest decisions you will have to make is choosing a trustee. Two popular options for this are using a private trust company or a professional trust company. Each option has its own advantages and disadvantages, and it’s important to consider your own needs and preferences before making a decision. In this blog post, we will explore the pros and cons of each option to help you make an informed decision about which type of trustee is the best fit for your trust.

First, let’s take a look at the advantages of using a private trust company to manage your trust. One of the biggest advantages is that a private trust company can be owned and controlled by the settlor of the trust, which allows for a greater degree of flexibility and control over the trust assets. For example, a settlor may choose to appoint a family member or close business associate as the trustee, which can provide a sense of comfort and familiarity. Additionally, a private trust company may also have the ability to invest in a wider range of assets and make investment decisions that align with the settlor’s goals and preferences.

Another advantage of using a private trust company is the ability to keep the trust assets and beneficiaries private. This can be especially beneficial for high-net-worth individuals or families who may want to keep their assets and financial affairs confidential. A private trust company can also provide a level of privacy that is not available when using a bank or other third-party trustee.

On the other hand, there are also some disadvantages to using a private trust company. One of the biggest disadvantages is the cost. Setting up and maintaining a private trust company can be quite expensive, and the settlor may be responsible for paying the costs associated with the company’s formation, administration, and ongoing operation. Additionally, private trust companies are not always as regulated as professional trust companies, which can lead to a greater level of risk and potential exposure to fraud or mismanagement.

Now, let’s take a look at the advantages and disadvantages of using a professional trust company to manage your trust. One of the biggest advantages of using a professional trust company is the level of expertise and experience that they bring to the table. Professional trust companies are typically staffed by experienced professionals who have a deep understanding of the trust and estate planning process. This can provide peace of mind for the settlor, knowing that their assets are being managed by experts who are well-versed in the legal and financial aspects of trust administration.

Another advantage of using a professional trust company is the level of regulation and oversight they are subject to. Professional trust companies are typically regulated, which can provide additional protections for the settlor and beneficiaries. Additionally, professional trust companies are often required to maintain certain levels of insurance and bonding, which can provide an extra layer of security for the trust assets.

However, there are also some disadvantages to using a professional trust company. One of the biggest disadvantages is the lack of control and flexibility. Because a professional trust company is not controlled by the settlor, the settlor may have less say in how the trust assets are managed and invested. Additionally, professional trust companies may have more restrictive policies and procedures that can limit the settlor’s ability to make changes to the trust or access to the trust assets.

Which is right for you depends on your personal preference and the particular needs of your trust. A private trust company offers more flexibility and control, but it is more expensive and less regulated. On the other hand, a professional trust company offers expertise and oversight, but less control and flexibility. Ultimately, you have to weigh the pros and cons of each option to determine which one is the best fit for your needs.

If you’re considering setting up a trust or are in the process of evaluating your current trustee, we hope this post has provided valuable information to help you make an informed decision. 

Deciding whether to use a private trust company or a professional trust company can be complex and it’s often helpful seek guidance from a professional.

We specialize in helping clients navigate the complexities of trust and estate planning. We understand the unique needs and concerns of our clients and are committed to providing personalized service to help you achieve your goals.

If you’re ready to take the next step in setting up or managing your trust, we invite you to contact us today to schedule a consultation.  Don’t let the uncertainty and confusion of trust management hold you back. Contact us today and let us help you secure your future and the future of your loved ones.

To learn more about the advantages and disadvantages of private trust companies and professional trust companies, we recommend the following resources:

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