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Overwhelmed by trustee duties? An agent for trustee can help

September 15, 2022 Article 3 min read
Jonathan S. Grossman Wealth Management

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 concerning distribution of funds. Here’s how an agent for trustee can help.

Two business professionals looking over documents.A successful business owner knows that a key to success is hiring the right people to help lead their organization financially, operationally, and administratively. In a corporate structure, this would be a chief executive officer (CEO) surrounded by impactful leaders such as the chief financial officer (CFO), chief operating officer (COO), and chief investment officer (CIO). And just as a business owner or CEO needs to surround themselves with the right team to be successful, so too does a trustee. As an individual trustee, one way to help ensure success — or choose the right “team” — is to establish an agent-for-trustee relationship with a professional fiduciary.

Choosing a trustee is a core component of the owner’s legacy of success. The choice of trustee is akin to choosing a successor CEO for a business: the owner must choose someone they can trust to be a good steward of the family's assets. Trustee options typically include key business leaders at the company, trustworthy family members or advisors, or a professional trustee. 

When an individual is chosen as trustee, they effectively become the “CEO” of the family wealth held within the trust. Like the successful business owner who created the wealth, they must surround themselves with a trusted support team 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 professional fiduciary to serve as agent for trustee can be critically important.

When an individual is chosen as trustee, they effectively become the “CEO” of the family wealth held within the trust.

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 when 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, as well as 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. 
  • Back-office support to provide trust accounting statements, cash movement, and bill payment: Professional assistance with principal and income accounting can provide efficiencies for the tax return and distributions. The professional fiduciary can also handle all cash movements, serving as an important safeguard to ensure there are no fraudulent payments. Using this back-office support can help streamline cash movements that are often high volume and time sensitive.
  • Creating an investment policy statement: The agent for trustee can assist in establishing an investment policy statement that helps ensure the goals of the trust are met.  
  • Guidance: The agent for trustee can provide valuable education to trustees and beneficiaries to understand trust and fiduciary concepts. 

Family wealth deserves the same attention as a successful business and needs a robust team in place to serve that family wealth appropriately. Give our team a call to see how we can help.

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