Corporate Trustee Case Study

Time for, and the value of, a Corporate Trustee

By: Jasper Vaccaro, Senior Vice President - Managing Director

There has been a trend over the last 20 years to name an individual trustee over a corporate trustee. I understand and appreciate the thinking of many donors. An individual family member may not charge a fee, and if they do, it may be less than that of a corporate trustee. The individual trustee may know the wishes of the grantor and have a closer relationship with the beneficiary. However, many times, the duties and responsibilities of being a trustee can become overwhelming and unmanageable for an individual trustee. Additionally, the individual trustee may find themselves in conflict with other beneficiaries who may be family members and even their children. This can occur even when things are going well. Then, with the passage of time, increasing age of beneficiaries and unforeseen illnesses can add complexities not thought of by the donors.

The following case study is a good representation of the value of a corporate trustee.

Madeline was a successful businesswoman. Over the course of her successful career, she accumulated significant net worth. As part of her estate plan, she created multiple Generation Skipping Trusts (GST). There is a trust for each of her siblings, her daughter, Abby, and each of her grandchildren. Abby was appointed as trustee over each of the trusts. Abby did a great job as trustee but found that it was increasingly difficult to manage her responsibilities as trustee for some of the trusts while managing all of the activities of her daily life, including her own successful business and career.

Madeline’s siblings both lived in different states than Abby. One of Madeline’s siblings, Jim, had a series of strokes. The strokes left him disabled. While still competent, he had a limited capacity to care for himself; he lived in an assisted care facility and was unable to manage his financial affairs or recall his assets.

Abby’s attorney approached us to see if we could help. Madeline and Abby had a long-standing relationship with an advisor who managed the assets of the multiple trusts. Their advisor worked with many high-net-worth families but did not have fiduciary powers. Abby wanted to protect the GST for Jim and ensure, once his own resources were diminished, he could receive Medicaid benefits and the GST would be used to supplement his needs.

At the time we were contacted, no one knew exactly what Jim’s assets were and where they were held. They thought he had a few small IRAs. He sold his home, but no one knew what happened to the proceeds. He had not filed a tax return in some time.

We worked with the family attorney to compile the following documents: a new revocable trust for Jim for which we are to serve as trustee; a General Durable Power of Attorney for Finances for which we are named as agent; and we were appointed as successor trustee for the GST for Jim. We worked with the attorney to restate the GST. There were two main reasons for the restatement. The first was to convert the existing GST to a special needs trust. We worked with the attorney to provide the proper wording. The special needs trust would allow Jim to receive public benefits and preserve the GST to supplement his needs. The second was to convert the trust to a directed trust. This allowed the long-term family advisor to continue to manage the assets of the trust. We provided the attorney with the language necessary to convert the trust to a directed trust.

The plan, for us as corporate trustee, was as follows: first, to discover and consolidate his assets into his revocable trust; second, manage and use his assets for his care until they were exhausted and then use his GST trust as a special needs trust.

We were provided with a few account statements for several small IRAs that were several years old. We did not know whether the accounts still had money in them. Moreover, we noticed from reviewing a prior tax return that he received a 1099 from an account, but there was no corresponding account statement. We did not know whether any of the accounts still existed.

The first thing we did after having been appointed was to meet with the beneficiary. We met with him to evaluate his mental and physical condition and the facility in which he was a resident. We learned he was receiving Medicare benefits but was not receiving social security. We contacted the Social Security Administration and arranged for a phone appointment. We also had him sign a number of documents, including those required to open a bank account for Jim to receive social security, prepared letters to custodians for the accounts we knew he had at one time, and placed calls with Jim to other providers.

Initially, we thought that Jim would have approximately $30,000 to $40,000. We found almost $400,000 of assets through our extensive efforts. We traveled to meet with Jim again and conducted the call with the Social Security Administration. He received 6 months of back social security and was set up to receive monthly social security payments going forward. The amount of his social security would significantly extend the life of his assets.

Had we not taken these actions, Jim may very well have exhausted his personal assets and the GST. We also discovered that the residential facility where he lives will not accept Medicaid payments. We have worked with the Power of Attorney for Health Care to find suitable alternative facilities.

The investigation to find Jim’s assets, our knowledge of public benefits, and our ability to manage a trust for his benefit so as to protect his public benefits, the flexibility to serve as trustee of his revocable trust and as a directed trustee of the GST, the time we have taken to meet with Jim, and the care we have exhibited in doing anything we can to be helpful, has added a considerable amount of value to the relationship. So much so, that the family has now asked us to help with administering another trust for another family member. This manifests the benefits and value of having a corporate trustee.

This is a true case study. Therefore, we have changed the names used in this article to protect the privacy of those involved.

If you are interested in learning more about whether a corporate trustee is right for your situation, please contact us at or (262) 522-7400.