When you set up a trust, it’s a common to name a friend or family member as trustee. This is simple to do and there are several advantages. Such a person is likely to be familiar with your personal wishes, will have earned your trust, and will serve for little or no compensation.
But what if you have no such person in your life? One option is to designate a bank trust department or a trust company.
That also could be a better choice even if you have someone you are confident could fill the role in general, but if your trust would require extensive and complex administration and record-keeping, or if there probably will be frequent transactions or distributions.
A family member or a friend may be willing to serve as trustee but might not always have the necessary experience or time. What’s more, if anything goes wrong, the trustee could be held financially responsible for losses; you might not want to have a friend or relative bear such liability.
Of course, hiring a corporate trustee means dealing with third parties and paying management fees. Nevertheless, in some cases this can be a worthwhile tradeoff. If you do appoint a corporate trustee, you also can include in the trust documents a “trustee replacement power,” giving the beneficiaries the ability to change one trustee for another who will be more acceptable.