Choosing A Trustee – Domestic Asset Protection Trusts
An You and your family must choose a trustee congruent with
not only your financial objectives, but your broader
aspirations. The trustee is bound by the rules of the trust,
but is afforded discretion when making decisions. The trustee
may either be a Private Trust Company or a Public Trust
Briefly, a private trust company is controlled by you and
serves only your family. A public trust company provides trust
services to multiple families and the general public.
The Trustee’s Role
The trustee’s role is to administer and distribute trust
assets as dictated by the trust document. The trustee’s roles
generall concer the administration and management of the
trust. Acting as a financial advisor may or may not be one of
the duties. The trustee is the guardian of the trust’s assets.
They handle filings, distributions and day to day activities.
They must keep accurate records, keep in contact with the
beneficiaries, and execute all the transactions.
Private Trust Company (PTC)
Private trust companies (PTCs) provide many benefits and are
often preferable for self-settled trusts. A PTC serves only
one family while providing increased control, lower costs and
more privacy. There is no third party to sign off on decisions
or pay. Further, they don’t require sharing information with a
anyone else. This is especially appealing given recent large
data breaches such as the Panama Papers.
The only downside is having family involved in intimate family
matters. Sometimes tough decisions are better handled by an
independent party who can claim their hands are tied. This
applies less to self-settled trusts than trusts which are
established for children and other family.
Public Trust Company
The benefits of a public trust company are a reduced workload
on your family and independence from the beneficiaries. They
offer better continuity over time and assistance with trustee
duties. These factors matter when a trust is established for
perpetuity, or there is not a lot of family willing or able to
take on the duties of being a trustee.
Independence: You may not always want
the beneficiary to retain influence over the trustee. For
example, if you have several children but one suffers
lifestyle problems. You do not want your spendthrift child
harassing the trustee (their sibling) everytime they want
money. Nor does the sibling want to be in the position of
controlling their sibling’s money. This can easy spoil the
relationship. In this case an independent trustee is clearly
For example, imagine Erika is the eldest of three children,
and her parents named her executor of the estate. Her brother
Brian has drinking problems and has become the black sheep of
the family. Even her parents know the problems Brian has, but
they still decided to divide everything equally. Now, Erika
knows that every time her brother needs money he will take it
and it will not be according to the wishes of his parents and
it could even affect their relationship if she tells him that
his lifestyle is not correct.