Stephen J. Buhler, Attorney at Law
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The advantages of using a corporate trustee

Some people in Utah may find a trust a useful part of an estate plan. Trusts may protect assets in a number of different ways. For example, IRAs or life insurance policies can be placed in a trust so they can continue to accrue value while tax-free or tax-deferred. A person may also place assets in a trust with conditions on distributions to beneficiaries such as reaching a certain age. If there is a goal for the trust, such as providing for the education of grandchildren, that can be written into the trust as well.

However, at this point, many people make a common error, and that is appointing a friend or family member as trustee. This is usually done because the friend or family member knows the grantor and the beneficiaries and would understand the grantor's wishes. The problem is that the loved one may be unprepared to manage and administer the trust. The trustee may lack the time and the level of legal and financial knowledge required, particularly given that a trustee is liable for managing assets effectively.

One solution is a corporate trustee, but this trustee may lack knowledge of the family. A corporate directed trust model would pair the grantor's financial planner with the corporate trustee. The financial planner would manage the assets and the corporate trustee would handle administrative duties.

People may want to discuss their financial situation and estate planning goals with an attorney to decide whether a trust is an appropriate tool for their situation. Trusts can be useful for people at many different income levels. Using trusts can keep the estate plan private and distribute assets more quickly to beneficiaries. They may also be useful in blended families in which there have been multiple marriages and children from previous relationships. However, for some people, a will may be sufficient.

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