How to Choose a Corporate Trustee

Start With the Trust’s Needs

Before contacting trust companies, consult an attorney and review the trust agreement. Identify the trustee’s required duties, discretionary powers, distribution standards, investment responsibilities, and any special instructions for beneficiaries.

A trustee generally holds legal title to trust assets and must administer them for the beneficiaries according to the trust agreement. In practical terms, the trustee controls the trust property but must use it for the purposes described in the trust agreement and for the benefit of the beneficiaries.

The trustee also acts as a fiduciary. This means the trustee must put the beneficiaries’ interests first and follow the trust agreement and applicable law. 

Consider these questions:

• Is the trust revocable or irrevocable?
• How long is the trust expected to last?
• What types of assets does it hold?
• Does the trust involve special needs planning or public benefits?
• Will the trustee need to make discretionary distributions?
• Are beneficiaries likely to disagree about money?

For example, a trust holding only publicly traded investments may require simple administration. A multigenerational trust, special needs trust, a trust holding assets requiring active management ,or a trust involving a family business may require more specialized services and experience.

Compare Services and Minimum Requirements

Corporate trustees differ in what they do directly and what they delegate to other professionals. Ask each company to provide a written description of its services.

Services may include:

• Safekeeping and administration of trust assets
• Investment management or wealth management
• Accountings, tax reporting, and recordkeeping
• Bill payment and other administrative tasks
• Real estate or business interest management
• Distribution processing
• Beneficiary communication and coordination with advisers
• Assistance with government benefit requirements

Do not assume that investment management includes full fiduciary administration. Some firms primarily manage investments, while others serve as trustee and handle the broader legal and administrative responsibilities.

Ask who will be responsible for each task. If the company uses outside advisers, determine who supervises them and who is responsible if a problem occurs. Also ask whether those professionals’ fees will be paid from trust assets in addition to trustee compensation. 

Many corporate trustees also set minimum asset requirements. The minimum may be based on the trust’s value, the expected annual fee, or the type of services requested. 

Ask:

• What is the minimum trust value or annual fee?
• Can the minimum be waived?
• Will the company continue administering the trust if its value falls?
• Are special needs trusts or trusts with real estate or other nonfinancial assets treated differently?

A company with a large minimum may not be practical for a smaller trust. On the other hand, a company with no minimum may not have the staff or experience needed for a complex trust. The important question is whether the company will remain a suitable and financially workable trustee throughout the trust’s life.

Understand the Fee Structure

Trustee fees are often based on a percentage of the assets under administration. Some companies also charge minimum annual fees, transaction fees, tax preparation fees, real estate fees, or special project fees.

Trustee fees may be governed by the trust agreement, state law, or both. Ask the company to explain how its fees are calculated and whether the trust agreement affects the amount it may charge. 

Request a complete fee schedule and ask:

• Is the fee a flat amount, a percentage, or a combination?
• Is there a minimum annual fee, and does the fee change as the trust’s value changes?
• Are investment management, custody, accounting, tax, or legal fees charged separately?
• Are there additional fees for distributions, wire transfers, property sales, trust review, or special projects?
• Are there additional fees for closely held businesses, real estate, or special needs trusts?

Also ask whether the company or an affiliated business receives compensation from the investment products or services it recommends.

A low percentage may not mean a lower total cost if the company has a high minimum or charges separately for common services. Ask each prospective trustee to estimate the annual cost using the trust’s actual assets and expected activity.

Review Distribution Policies

Distribution decisions are a common source of tension between beneficiaries and trustees. A company’s approach can significantly affect the family’s experience.

Determine whether the trust requires mandatory distributions or permits discretionary distributions. The trustee must follow the trust agreement and generally cannot replace the standards with personal preferences or informal family expectations.

Ask the company:

• How does it interpret health, education, maintenance, and support standards?
• How does it evaluate requests for housing, medical care, education, or transportation?
• What documentation does it require, and how long does a typical request take?
• Who makes the final decision, and can beneficiaries request reconsideration?
• How does the company handle unequal needs among beneficiaries?
• How does the company balance current distributions while preserving assets for the future?

A trustee should have a clear process, but the process should not be unnecessarily rigid. Beneficiaries need to know what information is required and when they can expect a response.

For a special needs trust, ask whether the company understands the difference between distributions that supplement public benefits and distributions that could interfere with eligibility. The trustee should be prepared to coordinate with the beneficiary’s family and professional advisers when appropriate.

Evaluate Investment Practices

Investment management is only one part of a trustee’s job, but it can strongly affect the trust’s ability to meet its goals.

Ask about:

• The company’s investment philosophy and approach to risk
• Asset allocation and liquidity
• Use of outside investment managers
• Investment restrictions in the trust agreement
• Treatment of concentrated stock and difficult-to-sell assets
• Investment reporting and review procedures
• Conflicts involving affiliated products or services

The trust’s investment strategy should reflect its distribution needs, time horizon, tax situation, and beneficiaries’ circumstances. A trust that must make regular payments may need more liquidity than a trust designed to preserve assets for future generations.

Also ask whether the corporate trustee can hold nontraditional assets. Some companies will not accept real estate, private company shares, mineral interests, collectibles, or other assets without special review.

Pay Attention to Communication Style

A technically skilled trustee may still be a poor fit if beneficiaries cannot reach the right people or understand how decisions are made.

During the selection process, notice how each company communicates. Does it answer questions directly? Does it explain unfamiliar terms? Does it provide a consistent contact person? Does it listen to the family’s concerns?

Ask:

• Who will be the primary contact?
• Who makes distribution decisions?
• How often will the trustee communicate with beneficiaries?
• How quickly are calls and emails returned?
• Will beneficiaries receive regular statements, and what information can the trustee share with family members?
• How does the company communicate during emergencies?

A family may prefer a large institution with extensive resources or a smaller trust company with more personal service. The best fit depends on the trust’s needs and the family’s preferences.

Look for Stability and Oversight

A corporate trustee should have the financial strength, experience, systems, and personnel to perform its duties for the expected life of the trust.

Review the company’s:

• Years in business and ownership structure
• Regulatory oversight and fiduciary experience
• Financial strength, insurance, and bonding
• Internal controls and recordkeeping systems
• Audit practices
• Staff turnover and continuity plans

You should also ask:

• Has the company faced significant complaints, regulatory actions, or litigation involving its fiduciary services? If so, what was the outcome?
• What procedures does the company use to identify and correct errors?
• What happens if the trust officer assigned to the trust leaves?

The exact oversight and qualification requirements depend on the type of trustee, the trust, and the services provided. Ask whether the company has experience with trusts similar to yours. A company that primarily manages standard investment accounts may not be equipped to administer a trust involving a disabled beneficiary, a family business, or complicated distribution provisions.

Use a Comparison Chart

Before interviewing companies, agree on the factors that matter most to the family. This makes it easier to evaluate the companies based on the same information instead of relying on personal impressions.

Comparing Corporate Trustees

After completing the chart, rank the factors. A family may decide that communication and special needs experience matter more than a small difference in fees.

Interview More Than One Company

Interview at least two or three potential trustees. Ask each company the same questions and request written answers.

Invite the estate planning attorney or another trusted professional to participate. The attorney can help identify provisions that require special attention, while a financial professional can help compare investment and fee structures.

Consider asking for references from attorneys or other professionals who have worked with the company. You may also ask how the company handled a difficult distribution request, an illiquid asset, or a disagreement among beneficiaries. The company may not be able to disclose confidential details, but its general explanation can reveal how it approaches challenging situations.

Do not rely only on the person who presents the company’s services. Ask to meet the individuals who would actually administer the trust.

After the interviews, save the proposals, fee schedules, notes, comparison chart, and reasons for the final decision. A written record can help explain why the trustee was selected and make it easier to review the relationship if the company’s fees, services, personnel, or the beneficiaries’ needs change.

Consider a Corporate Trustee and Family Member Together

A corporate trustee does not always have to serve alone. Depending on the trust agreement and state law, a family member or trusted adviser may serve as co-trustee or in another oversight role.

This arrangement can combine professional administration with personal knowledge of the beneficiaries. However, it can also create confusion if responsibilities are not clearly divided.

Before choosing co-trustees, ask:

• Who makes investment decisions?
• Who approves distributions?
• Must both trustees agree?
• Who handles tax and accounting matters?
• How are disagreements resolved?
• What happens if one trustee resigns?
• Will having two trustees increase costs or delay decisions?

A co-trustee structure may be useful, but it should be carefully drafted and explained. If the roles overlap, the arrangement may increase conflict rather than reduce it.

When to Seek Professional Advice

Selecting a corporate trustee can affect taxes, public benefit eligibility, investments, beneficiary rights, and family relationships. State laws also vary, and the trust agreement may limit who can serve or how a trustee can be removed. An estate planning attorney can review the trust, explain the trustee’s authority, and help the family compare candidates. 

The right corporate trustee is not necessarily the largest company or the one with the lowest fee. It is the trustee that has the capacity, experience, communication style, and distribution approach to carry out the trust’s purpose over time.