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Risks and benefits of using a corporate trustee

Most Florida residents know that having an honorable and dedicated trustee should be a key part of any good estate plan. That’s why many testators choose a beloved family member or close friend to be their trustee. However, if a testator does not have a close friend or family member, they may opt to have a corporation act as their trustee. But, choosing a corporate fiduciary brings with it certain benefits and potential risks.

One of the main benefits of choosing a corporation to carry out an estate’s fiduciary duty is that these companies are professionals so they are very good at their job. Chances are that the company employees who are assigned to a testator’s estate have many years of experience dealing with getting an estate through probate, as well as investing the assets of the estate in order to help its beneficiaries.

Another benefit of having a corporate trustee is that they have no relationship with any of the beneficiaries of the estate. This separation means that they are not subject to any level of stress that a family member trustee would be subject to. They also can’t be biased towards any one beneficiary. They are duty bound to follow the terms outlined in the testator’s estate plan.

A disadvantage of having a corporation act as a testator’s trustee is that corporate fiduciaries can be very stiff and inflexible in the way they conduct their business duties. Following a testator’s estate plan to the letter can lead to discontent for some of an estate’s beneficiaries. This in turn can lead to court battles, with the beneficiaries taking the corporate trustee to court over their handling of the testator’s estate.

Another disadvantage of having a corporate trustee is that these companies often follow the recommendations of their committees, which in turn can lead to extended delays for an estate. Any Florida resident who is developing their estate plan may want to speak to get more information in order to discover additional benefits and risks of using a corporate trustee.

Source: about.com, “Pros and cons of choosing corporate fiduciaries“, Accessed July 17, 2016

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