Replacing a corporate co-trustee
Objectives
A family had multiple trusts with family members and a bank serving as co-trustees. The bank was not performing to expectations, so the beneficiaries and family co-trustees sought to remove the bank and replace it with another corporate co-trustee. The family had a number of questions:
- How could the corporate co-trustee be replaced in the most efficient manner to avoid unnecessary costs and delays?
- The bank manages some of the trust assets, so how should the change in co-trustee be coordinated with a transition to a different manager of those trust assets?
- What banks or other corporate trustees should the family consider?
- How should the successor co-trustee be selected?
- What roles, responsibilities, fees and other arrangements for the successor co-trustee were appropriate, and how should they be documented and monitored?
Solution
Our advisors documented the reasons for a co-trustee change and the desired characteristics of a successor corporate co-trustee, advised the family regarding successors to be considered, and managed a Request-For-Proposal process that led to the family’s selection of a successor co-trustee. We then helped develop and execute a Memorandum of Understanding that described the co-trustees’ roles, responsibilities, fees and other arrangements. Working with the successor co-trustee and the family’s attorney, the advisors developed and executed a plan-of-action for removing and replacing the current corporate co-trustee. A key aspect of the plan involved helping the family trustees and beneficiaries understand their roles and responsibilities. Throughout this process, the advisors remained alert to estate planning strategies that could offer opportunities to reduce transfer taxes and/or improve the administration of the trusts.
Summary of Services Provided
- Improving the administration of family trusts
- Guiding the removal and replacement of trustees
- Educating trustees and beneficiaries
