Choosing a trustee to help you take care of yourself, your loved ones and your assets is a big decision.

A trustee facilitates the administration of assets from one generation to the next. Choosing a trustee to help you take care of yourself, your loved ones and your assets is a big decision. A qualified trustee has more than trust administration experience and knowledge; they also have exceptional listening and relationship-building skills, an understanding of how to navigate complex family structures, and a strong team behind them. This article outlines four critical factors to consider and some questions to ask when choosing a trustee.

1. Experience

Experience navigating a complex family structure is a crucial factor to consider when choosing a trustee, says Felix Meneses, Cadence Bank SVP, Trust & Estates Manager. A qualified trustee has considerable experience balancing the needs of co-trustees, current beneficiaries and future beneficiaries through the language of the trust document. This experience allows them to make appropriate discretionary decisions in a professional manner and helps limit conflicts that may arise between family members.

Additionally, even though the discretionary distributions of trust assets are outlined in trust documents, it’s important to know what process the trustee goes through to understand the needs of all stakeholders prior to making a discretionary decision.

While you can get a feel for a corporate trustee’s experience by reading their online bio, you’ll want to know more than how long they’ve worked in the industry. Here are some questions to better qualify their experience:

• Can the trustee provide a track record of their investment management performance?
• How has the trustee dealt with complex family dynamics in the past?
• How does the trustee make discretionary decisions, and how often does the trust committee meet?

2. Expertise

Depending on your wealth management goals, you may want your trustee to have specific expertise.

“For example, if you have a trust with oil and gas assets, does your trustee have an oil and gas expert on their team?” Meneses says. “If you own real estate in multiple states, it might be worth setting up a trust to avoid going through the costly, time-consuming probate process in each state. So, does the trust team have a real estate expert to allow you to properly manage the real estate that’s within the trust?”

Here are some questions to qualify a trustee’s expertise:

• What expertise does the corporate trustee and their team have?
• Do they have an expert related to your specific assets and/or trust goals (i.e., real estate, oil and gas assets, estate planning, etc.)?
• Do they have experience managing generation skipping trusts, supplemental special needs trusts, irrevocable life insurance trusts or other types of trusts that interest you?

3. Personal relationships

“A big part of the job is building relationships—not just handling transactions that are requested of us but really understanding what someone’s needs are,” Meneses says.

He says a trustee’s ability to build personal relationships is an important factor many people overlook. Communication is key to building personal relationships with your trustee, and you should have direct access to your trust administrator. Some corporate trustees only provide clients with a 1-800 contact number.

“On the surface, it seems very efficient,” Meneses says. “Ultimately, however, it makes it difficult for an individual serving as a corporate trustee to have multiple interactions and conversations over the years. This prevents them from developing a deep relationship and understanding of the family structure.”

Here are some questions to qualify a trustee’s ability to build personal relationships:

• How is the trustee set up to build deep relationships?
• How will you communicate with the trustee, and how often can you contact them?
• Do you have direct access to your trust administrator or do you have to go through a 1-800 number or other gatekeepers?

4. Support and resources

A trust is part of your greater wealth management goals, and a qualified corporate trustee is part of a greater wealth management team.

“As a trust administrator, you’re the quarterback of the relationship,” Meneses explains. “As a result, you really have to have a top-notch team around you to help the client be successful.”

A qualified trustee consults their team for support in the form of investment expertise, legal counsel, specialty asset management, tax advice and lending solutions. Having the support of a greater wealth management team ensures that the best ideas are brought to the forefront and your trustee is aligned with your other financial goals.

Here are some questions to qualify the strength of a trustee’s team:

• Is the trustee supported by a larger team?
• What other wealth management services are available?
• Will you have access to lending capabilities, if needed?

Warning signs of an unqualified trustee

Some warning signs of an unqualified trustee include:

• They can't speak to their experience.
• They can't provide a track record of their investment performance.
• They can't easily explain how they make discretionary decisions.
• Their team lacks the expertise you desire.
• It's difficult to get in touch with them.
• You can only contact them via a 1-800 number.
• They have limited access to resources.
• They're unsupported by a greater wealth management team.

Choosing a corporate trustee vs. individual trustee

Some people may consider an individual trustee, such as a friend or family member, to manage their trust. The main benefit of choosing an individual trustee is feeling that your interests are looked after by someone who knows and cares for you. However, individual trustees still have liability like corporate trustees.

“As a trustee, you have personal liability. I don't think that’s always fully understood,” Meneses says. “If an individual acts as a trustee for someone, they have personal liability for anything that goes wrong. When you have a corporate trustee, you have a corporation backing up all of the work being done.”

Meneses explains how if an individual trustee knows the family well, they’re also subject to family influence and disputes. This could create conflict between family members.

“When you have a corporate trustee, you have a completely unbiased party that's coming in to execute on what the trust document states—somebody that has experience and understands the precedents they're setting with the distributions made to various family members over time. This also reduces the risk of animosity between family members.”

Whether you’re considering a corporate trustee vs. individual trustee, start by qualifying their experience and expertise.

Get in touch

If you’d like to discuss your trust goals with one of our experts, get in touch with a Cadence Bank trust officer today.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.