Corporate trustee is a trustee that is incorporated as a company (and made up of directors), and performs the same role as an individual trustee, but collectively .
Trustee is a synonym for anyone in a position of trust and so can refer to any person who holds property, authority, or a position of trust or responsibility to transfer the title of ownership to the person named as the new owner, in a trust instrument, called a beneficiary. A trustee can also refer to a person who is allowed to do certain tasks but not able to gain income, although that is untrue .
Corporate vs. individual trustee
According to Dixon D. there are both advantages and disadvantages to having either individuals or a company act as trustee. When it comes to fees, individuals trustees will initially be the cheaper option. With a corporate trustee you will face an additional cost to set up the company. You will also incur an annual review fee. Despite the higher upfront cost and ongoing reporting requirements, a corporate trustee is likely to save you money in the future by simplifying your fund's administration. For example, if your fund has individual trustees, every time a member comes or goes, you will need to vary the fund's trust dead. The corporate trustee structure also offers a great administrative advantage .
Choosing a corporate trustee
Power T. recommends that if you choose to have a corporate trustee then you must ensure that your trust deed allows for a corporate trustee. You must also set up the trustee company before you can execute your trust deed .
Follow the steps below :
- Appoint the trustee
- Admit members
- Sign the trustee declaration
- Open a bank account
- Establish accounting and administrative procedures
Resignation of trustee
As stated in Special Needs Trusts Handbook if corporate trustee becomes unwilling to continue to serve as corporate trustee hereunder and wishes to resign, corporate trustee shall give notice of its resignation to Trust Protector. The resigning Corporate Trustee shall provide a full final accounting on all trust transactions since the last full accounting and a complete asset list to Trust Protector at or within sixty days after the date Corporate Trustee gives notice of resignation to Trust Protector.
Trust Protector shall be responsible for designating a substitute Corporate Trustee within sixty days from the date of receipt of the notice of resignation. Thereafter Corporate Trustee shall have one hundred twenty days after the appointment of a Successor Trustee to effect a full and final transfer of all assets of the Trust to the substitute Corporate Trustee.
If the Trust Protector fails to appoint a Success Trustee within sixty days, then the resigning Corporate Trustee may file an action in a court of competent jurisdiction for the appointment of a Successor Trustee .
Examples of Corporate trustee
- Private trust companies: Private trust companies are corporate trustees that provide services to individuals, families, and institutions. They typically provide services such as trust administration, estate planning, and asset management.
- Banks: Many banks offer corporate trustee services, such as trust administration, estate planning, and asset management.
- Investment advisors: Investment advisors offer corporate trustee services such as trust administration, estate planning, and asset management.
- Insurance companies: Insurance companies may provide corporate trustee services, such as trust administration, estate planning, and asset management.
- Charitable foundations: Charitable foundations may use corporate trustees to manage their assets and oversee their operations.
Advantages of Corporate trustee
A corporate trustee provides a number of advantages that an individual trustee may not be able to offer. These advantages include:
- Professionalism - As a corporate trustee is a company, it is subject to the same regulations as any other company, such as corporate governance and financial reporting. This provides an additional layer of oversight and assurance that the trustee is following the terms of the trust deed.
- Efficiency - Corporate trustees are often able to provide more efficient services than an individual trustee, due to the larger pool of resources that they can draw on to manage the trust. This can result in a faster and more efficient service that is better equipped to meet the trust’s objectives.
- Stability - By using a corporate trustee, the trust may benefit from greater stability due to the company’s continuity. Unlike an individual trustee, who may resign or pass away, a corporate trustee will remain in place, providing a consistent, professional service.
- Experience - Corporate trustees typically have a wealth of experience in managing various trusts, providing invaluable expertise and insight. This may be beneficial in ensuring that the trust is managed in accordance with the terms of the trust deed.
- Objectivity - A corporate trustee is better equipped to remain impartial and objective in making decisions. This can be beneficial in helping to ensure that the trust is managed in the best interests of the beneficiaries.
Limitations of Corporate trustee
A corporate trustee has some limitations to consider when appointing them for estate or trust matters. These limitations include:
- Liability: As a company, a corporate trustee can be sued in a court of law for any breach of fiduciary duties. This could result in a significant financial loss for the company and its directors.
- Cost: Corporate trustees generally charge higher fees than individual trustees, due to their overhead costs, such as legal and accounting staff.
- Complexity: Corporate trustees may not be as familiar with the personal or family dynamics of the settlor’s estate, which can lead to misunderstandings or delays in the administration of the trust.
- Governance: Corporate trustees are subject to corporate governance regulations, which can be complex and time-consuming.
- Lack of Flexibility: Corporate trustees tend to be more rigid and less flexible than individual trustees, and may not be willing to take on certain tasks or make certain decisions.
A corporate trustee is a trustee that is incorporated as a company and made up of directors, and performs the same role as an individual trustee, but collectively. Other approaches related to corporate trustees include:
- Representation of Beneficiaries: The corporate trustee is responsible for representing the beneficiaries' interests in the trust assets.
- Investment Management: The corporate trustee is responsible for managing investments and administering the trust.
- Tax Planning: The corporate trustee is responsible for filing tax returns, making tax payments, and advising on strategies to minimize taxes.
- Regulatory Compliance: The corporate trustee is responsible for making sure the trust is compliant with all relevant laws and regulations.
- Asset Protection: The corporate trustee is responsible for protecting the trust assets from creditors and other third-party claimants.
In summary, a corporate trustee is responsible for representing the beneficiaries' interests, managing investments, filing tax returns, ensuring compliance with all relevant laws and regulations, and protecting the trust assets.
- Bishell P. (2008)., Self Managed Superannuation Trustee's Handbook, Wrightbooks, Australia
- Cline C. (2009)., The Law of Trustee Investments, Defending Liberty Pursuing Justice, Chicago
- Dixon D. (2012)., Securing Your Superannuation Future: How to Start and Run a Self Managed Super Fund
- Gitman L., Joehnk M., Billingsley R. (2014)., Personal Financial Planning, South-Western Cengage Learning, Mason
- Henderson S. (2012),. Everything you need to successfully set up and run your own Self Managed Superannuation Fund
- Hendrickson R., Silverman N. (2003)., Changing the Situs of a Trust, Law Journal Press, New York
- Hook A., Dudek P., (2019)., Special Needs Trusts Handbook, Wolters Kluwer, New York
- Morgan R., Boyer E., (2019) Planning for the Elderly in Florida, LexisNexis, New York
- Power T. (2015)., DIY Super For Dummies, Wiley Publishing Australia
- ↑ Power T. 2019 p. 108 (DIY Super For Dummies)
- ↑ Black's Law Dictionary, Fifth Edition 1979 p. 1357
- ↑ Dixon D. 2012 (Securing Your Superannuation Future: How to Start and Run a Self Managed Super Fund)
- ↑ Power T. 2015 p. 107 (DIY Super For Dummies)
- ↑ Power T. 2015 p. 107 (DIY Super For Dummies)
- ↑ Hook A., Dudek P., 2019 p. 96 (Special Needs Trusts Handbook)
Author: Paulina Wolnik