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September 2, 2021 Article 3 min read

Being a trustee is a pivotal — and at times stressful — role in the success of an estate plan. It involves investment planning, back-office trust administration, and complex decisions around distribution of funds. Here’s how an agent for trustee can help.

Business professional walking down a flight of stairs holding a briefcase.A successful business owner knows that a major key to success is hiring the right people to help lead their organization financially, operationally, and through day-to-day management. In a corporate structure, this would be a chief executive officer (CEO) surrounded by impactful leaders in the chief financial officer (CFO), chief operating officer (COO), and chief investment officer (CIO) roles, whom they’d rely heavily on for advice and support.

As the business grows, so too does the owner’s personal balance sheet, leading to engagement of personal planners for tax and legal matters, as well as investment management, and often the establishment of a core estate plan to ensure their legacy of success continues for future generations. The estate plan often includes trusts and other vehicles that will enable the family business to stay intact for generations to come.

Choosing a trustee is a core component of the owner’s legacy of success. Trustee options typically include key business leaders at the family business, trustworthy family members or advisors, or a corporate entity.

The choice of a trustee is like choosing a successor CEO for the business: the owner must choose someone they can trust to be a good steward of their family’s assets. This often falls on an individual or collection of individuals whom they trust, whether business- or family-related.

When an individual is chosen as trustee, that individual effectively becomes the “CEO” of the family wealth — and just like the successful business owner who created the wealth, they need to surround themselves with top-tier support team members to ensure the wealth is properly managed. Most know to engage a financial advisor — the “CFO” of the family wealth — to oversee trust investments, but they often forget to consider the “COO” and “CIO” roles. This is where engaging a firm to serve as agent for trustee can be critically important.

When an individual is chosen as trustee, that individual effectively becomes the “CEO” of the family wealth.

An agent for trustee engagement encompasses three important facets trustees need to manage family wealth successfully:

  • Holistic investment management (the CFO role)
  • Trust administration (the COO role)
  • Guidance and support for key trustee decisions (the CIO role)

More specifically, aside from investment management, an agent for trustee relationship provides important guidance and administrative support to the trustee, including:

  • Consulting on discretionary distributions: Disbursements to beneficiaries — and the reasons behind them — can be difficult to assess given the gray areas and discretionary decision-making associated with making distributions from a trust. Guidance from a professional can provide a level of security and confidence that a decision is correct and ensure appropriate documentation is in place to inform and support the trustee’s decision.
  • Nonmarketable asset management: The agent for trustee can help coordinate capital commitments and distributions for direct and private equity investments and coordinate and manage real estate assets and family business interests.
  • Expert coordination between tax team and legal team: The agent for trustee can streamline these processes and communicate effectively with these parties on behalf of the trustee.
  • Serving as the back office to provide trust accounting statements and cash movement and bill payment: Professional assistance with principal and income accounting can provide efficiencies for the tax return and potentially for distributions.
  • Creating an investment policy statement: The agent for trustee can assist in establishing an investment policy statement that’s focused on protecting the individual trustee.
  • Planning: The agent for trustee can provide valuable guidance for generational planning and assistance in understanding trust and fiduciary concepts.

Much like a successful business, an agent for trustee relationship can help ensure all facets of trust administration and guidance are covered for the individual trustee. As a business owner, you wouldn’t just hire a CFO — you’d ensure your company’s operation and guidance was appropriate as well. Your family wealth deserves that same attention. If you agree, give our team a call to help.

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