Who Do You Trust? Selecting an Executor or Trustee - A Primer
by James V. Quillinan, Attorney at Law
The Letitia Building
70 South First Street
San Jose, California 95113-2406

Another significant advantage is the corporate fiduciary's continuous existence. Corporate fiduciaries do not get sick, take vacations, have family emergencies or die.

Corporate fiduciaries' are typically regulated by state and federal laws that subject them to inspections by state or federal examiners. This regulation increases accountability and results in the beneficiaries having greater security.

If a fiduciary breaches its fiduciary duties, the aggrieved beneficiaries often have a greater chance of recovery against a corporate fiduciary than against an individual. Most individuals, lack sufficient nonexempt property to permit a full recovery, while corporate fiduciaries typically have significant assets against which the beneficiaries may proceed. In addition, corporate fiduciaries "often prefer to settle their mistakes instead of litigating them."

Potential disadvantages. You must also consider reasons why the selection of a corporate fiduciary may not be the better choice. Corporate fiduciaries impose fees for providing fiduciary services, unlike most individual trustees, who are typically family members or friends. However, the fee is often a small price to pay for the expertise that the corporate fiduciary brings to the job. Of course, if the value of the estate or trust is relatively low, the fee may be prohibitive. Nonetheless, even in some low-value estate situations, the extra expense may be worth the benefits of professional management.

Corporate fiduciaries are often viewed as impersonal because they lack the rich history with you , your property and the beneficiaries that a family member or friend could bring to the job. Accordingly, corporate fiduciaries may lack the insight necessary to give adequate attention to the specific facts of each estate or trust. The corporate fiduciary may not be able to exercise as accurate a substituted judgment for the testator or settlor as could an individual trustee. You may also fear a lack of accountability in one specific individual. These concerns may be overcome by you establishing a long-term relationship with the particular individuals who administer estates and trusts. Although it is true that these individuals may be reassigned, quit or die and that the corporation may be the subject of a merger or reorganization, similar risks exist for individual fiduciaries. You may wish to prepare a detailed memorandum providing background information about your assets and family situation, which the corporate fiduciary could use as a reference. "For every 'horror story' about big, impersonal departments, there is a corresponding anecdote about a trust officer who has taken a more caring, personal approach toward you than your own family members."

On the other hand, you may be seeking an impersonal approach. A corporate fiduciary is able to make unbiased decisions when beneficiaries of a discretionary trust make demands for distributions. Corporate fiduciaries are unencumbered by the emotions and feelings of family loyalty and sympathy that could prevent a family member trustee from making an objective decision.

Another often-cited reason to be wary of corporate fiduciaries is that they make overly conservative investments that do not keep up with inflation. This concern has less merit today than it had in the past, especially in light of the Uniform Prudent Investor Rule, described above.