Sterling Trustees Announces the Benefits of Choosing an Independent Corporate vs. Individual Trustee

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The renowned independent trust company provides clientele with an in-depth analysis of the most advantageous choices for their trustee.

Sterling Trustees

The colder seasons bring with them a plethora of health and accident-related concerns, making them the perfect season to establish a trust, in preparation for every worst-case scenario. However, individuals faced with the task of establishing a trust encounter a multitude of complex decisions, most significant of which includes the choice of a trustee. The trustee is the most fundamental piece of the puzzle, as they are responsible for administering the assets in accordance with the outlined provisions. Those establishing a trust can choose between an independent corporate trustee, an institution such as a bank or investment firm, or an individual such as a family member, accountant or attorney. Most people looking for someone to manage their trust tend to seek guidance from their “centers of influence” – estate planners or accountants – and many end up settling on an individual trustee. Unfortunately, while there are benefits to these relationships, even highly-educated and knowledgeable individuals can find managing a trust both burdensome and complex.

As one of the most respected independent trust companies in South Dakota, Sterling Trustees understands the complexities of trust management and guarantees professional services free of any potential conflicts of interest. As a testament to their dedication, they have compiled a detailed comparison of the benefits of, as well as the detriments to, independent corporate vs. individual trustees, in order to help their existing and potential national and international clientele make an educated decision.

One of the biggest benefits of individual trustees is that they come with the hard-earned and deeply respected knowledge of family relationships and dynamics. They know the key players and how to interact with them, as well as how to determine which situations will be more difficult to navigate and how to manage them. What’s more, many are willing to do all of that for a lower, or nonexistent, fee. However, it is important to note that these benefits come with major drawbacks: possible conflicts of interest may arise between family members, beneficiaries and the individual trustee, who may not have the knowledge and experience to understand the potential issues fully. A limited familiarity with applicable laws and tax requirements can also highlight the complications with the individual trustee’s abilities. Not to mention the successor issues that can arise and the probability of the listed trustee’s own death, disability or absence. Grantors who set up the trust tend to pick people of a similar age to act as trustee. This usually happens when the grantor has accumulated wealth toward the end of his or her working life, limiting the time available to serve as trustee.

While independent corporate trustees come with their own list of shortcomings, such as a possible lack of familiarity with family dynamics, their benefits far outweigh their disadvantages. Independent corporate trustees offer objectivity that binds them to the terms of the trust document. It can be challenging for an individual trustee who is a parent, sibling or friend to act objectively, while an independent corporate trustee can make decisions that are unbiased. In addition, the reliability of corporate trustees is unsurpassed by individuals, as illnesses, vacations, injuries or death will not prevent them from administering the trust or threaten its continuity throughout its full term. Independent corporate trustees are also well-versed in all legal and tax requirements, and are fully insured against lawsuits as well as losses due to negligence. Finally, while an independent corporate trustee will not manage a trust for free like a family member might do, but clients can rest assured that their money is well-spent, as the company is guaranteed to carry out all of the fiduciary duties given to them. Between the internal and external auditors and the government regulators, independent corporate trustees are subject to many levels of oversight.

The largest disadvantage to independent corporate trustees is that many individuals are not as aware of them as an option, or are simply unfamiliar with how to choose one that is truly independent. Sterling Trustees provides independent trust management services with impartiality and an unparalleled adherence to duty. They provide fee-only trust administration services and do not receive sales or brokerage commissions, assuring their objectivity, and they strive to inform and educate their clients to ensure transparency. On the other hand, a corporate trustee, like a bank or other institution, oftentimes suffer from conflicts between what is in the best interests of the trust and what is most profitable for their firm.

Contact Sterling Trustees at their South Dakota office for more information. They can be reached by e-mail at info(at)sterlingtrustees(dot)com or phone at 605-593-8950.

About Sterling Trustees

Sterling Trustees is a fee-only, South Dakota-chartered trust administration firm located in Sioux Falls, South Dakota. By working independently, the firm allows its clients to avoid the extra costs and conflicts of interest associated with large financial institutions. Sterling Trustees' main goal is to keep assets safe while remaining objective.

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Angela Olmeda