Working with a "Corporate Fiduciary"
DEAR TRUST OFFICER:
I was going to name my daughter as the executor of my estate, but the lawyer drafting my estate plan has recommended using a “corporate fiduciary” such as a trust department or trust company. Why should I do that? What advantages does a corporate fiduciary bring to the table? — SHOPPING FOR ADVICE
DEAR SHOPPING:
“Fiduciary” is a legal term that describes the duties that one party owes to another in a business relationship. A fiduciary duty is the highest duty of care in the law and has been a standard element of trust practice for decades. There are many elements to fiduciary duties, but perhaps the most important is the duty of loyalty, to put the interests of the client ahead of one’s own interests.
A “corporate fiduciary” is a business entity, such as ours, that has been granted permission by the state to act in a fiduciary capacity. We can serve as trustee, and we can settle estates. In this capacity, we are subject to a wide range of audit controls and government regulatory supervision.
More and more financial advisors have voluntarily moved to abide by this standard.
We are compensated for our services with a fee that varies with the size of the account under management. We do not earn more based upon the transactions that we generate or the type of service that we recommend. Our interests are, therefore, always aligned with the interests of our clients. We prosper when they do.
When we act as trustee, our investment decisions must be responsive to the needs of both current and future beneficiaries. This is not an ordinary perspective to have for portfolio management. Our approach cannot be risk free, but it does tend to be risk averse.
We would be pleased to meet with you to learn more about your circumstances, and to present our experience and perspective on thoughtful wealth management in more detail.
Do you have a question concerning wealth management or trusts? For any inquiries, please contact us.
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