The fiduciary that you select for an estate or trust must be someone reputable whom you trust. After all, they will be in charge of protecting your best interests if you pass away or become incapacitated. Many people select a spouse, relative or trusted friend.
However, the fiduciary you select should also have knowledge of how to manage business and financial matters. If your acquaintances do not have this experience, then you may want to consider a corporate fiduciary.
What is a corporate fiduciary?
A corporate fiduciary is a business entity that handles your affairs with your best interests in mind. Some examples of entities that can act as fiduciaries include:
- A bank that provide trust administration
- Professional trust companies
- Financial advisory companies
Perhaps you do not feel that one of your relatives would have your best interests in mind. Or you question whether they would know how best to manage your assets. In either scenario, a corporate fiduciary may be a good option for you. If you feel that having one family member in charge could lead to inter-family tensions, corporate fiduciaries act as a neutral party.
When a fiduciary breaches their duty
Although corporate fiduciaries owe a duty of care to their clients, some bad apples do not always act honorably. Even the most reputable of companies may have untrustworthy people in their ranks. In the event of a breach of fiduciary duty, you or your beneficiaries may need to file legal action.
There is no indication whether corporate fiduciaries or private individuals commit breach of fiduciary duty more often than one another. However, consider that your surviving loved ones may find it difficult to bring a lawsuit against their own relative or family friend. In a situation like this, having a corporate fiduciary may make it easier on your beneficiaries if they need to file legal action.