As trusts evolve, the need for a robust and experienced trustee is paramount.  

  • Over the past half-century, the role of trustees has evolved rapidly along with the trust industry itself.
  • Increased complexity of trust investments and expansion of modern trust laws are just two elements of this evolution.
  • Modern trusts require the services of robust professional trustees adept at navigating complex legal, tax, investment, and regulatory issues. 

The trust industry: a brave new world

Over the past half-century, the role of trustees has evolved rapidly along with the trust industry itself. We have seen a transition in the investment standards guiding trustees from a “prudent man” using legal lists to a “prudent investor” employing modern portfolio theory. Jurisdictional considerations for a wealthy family have progressed from inter-state to multinational during this time as well; trustees are now required to understand concepts of foreign taxation and foreign property law regimes and remain compliant with strict federal Know Your Customer laws put in place to combat money laundering and terrorist financing.  

There has also been an unbundling of the trustee’s role where co-fiduciaries take on the responsibility for directing certain aspects of a trust’s administration in a directed trust. Finally, today’s beneficiaries often request their inheritances in trust to obtain protection from creditors and to minimize transfer taxes by holding inherited assets in trust. These changes have spurred the evolution of the trust industry and presented new challenges to its continued growth and profitability.

 Please see important disclosures at the end of the article.

Download Article