The trustee is the person or company who legally holds the trust’s assets. The trustee holds those assets as trustee for the trust, for the benefit of the beneficiaries. Typically, the trust deed will outline the trustee’s powers. The trust deed is the formal governing document of the trust. It will usually state that the trustee:-

  • owns the trust’s assets; and
  • makes distributions to the beneficiaries.

Some of the additional duties of a trustee include to: act in good faith (i.e. honestly, and without an intention to deceive); exercise reasonable care in the administration of the trust; keep proper books and records; avoid a conflict of interest; carry out the trust’s terms; and not benefit from its position as trustee (except where provided under the trust terms or at law).

What is a corporate trustee?

A corporate trustee is a company that acts as trustee of a trust.
Gabael Trust can act as the sole or joint trustee in all types of trust arrangements. Each has its own nuances, benefits and disadvantages, so it is important to thoroughly understand them before deciding which is best for your needs.

When a trust is created, the creator of the trust can name Gabael Trust to serve as the trustee and to assume legal ownership of the property, which could be cash, securities, real estate or other property. Gabael Trust is often suited to trusts where the size of the trust, the complexity, and composition of assets requires a high level of experience. Gabael Trust holds legal title to the property for the benefit of the beneficiaries and acts according to the terms of the trust.

Some of the trust arrangements in which Gabael Trust can act as corporate trustee include: –

  • Living Trust: A living trust is a legal document created by you (the grantor) during your lifetime. Similar to a will, a living trust spells out exactly what your desires are with regard to your assets, your dependents, and your heirs. The big difference is that a will becomes effective only after you die and your will has been entered into probate. A living trust excludes the process of probate, enabling your successor trustee (who fills the same role as an executor of a will) to carry out your instructions as documented in your living trust, and if you are unable to manage your financial, healthcare, and legal affairs due to incapacity.
  • Testamentary Trust: A Trust made within a Will, where the Will instructs how the Trust should be established after you pass.
  • Life Insurance Trust: An Irrevocable Trust that will hold life insurance proceeds after you pass.
  • Charitable Trust: Trusts that donate some or all of your estate to the charity you identify. Can be structured to pay the charity first and then the balance to your loved ones, or the other way around.
  • ESOP: An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers ownership interest in the company. An ESOP is usually formed to facilitate succession planning in a closely held company by allowing employees the opportunity to buy stock. ESOPs are set up as trust funds and can be funded by companies putting newly issued shares into them, putting cash in to buy existing company shares, or borrowing money through the entity to buy company shares. Companies of all sizes including a number of large publicly traded corporations use ESOPs.
  • Employee Welfare Trusts (EWT): These are established to cater to employee welfare needs such as funding child education, medical expenses and extra ordinary expenses not covered under compensation.

Living Trusts can be revocable or irrevocable.

What is a Revocable Trust?

A Revocable Trust is a Trust that can be revoked, meaning it can be changed or updated at any given time as long as you’re still living and of sound mind. Also known as a Revocable Living Trust, this can be a good option if you want to establish a Trust, yet still maintain control over your estate and assets while you are alive. Keep in mind that once you fund a regular Trust, the Trust becomes the owner, not you. Of course, upon death, a Revocable Trust automatically becomes Irrevocable and cannot be changed.

Benefits of a Revocable Trust

Revocable Trusts are unique for several reasons.

  • Flexibility: They are flexible when and if you want to ever amend them. Revocable Trusts are typically easier to amend than a Will.
  • Avoids Probate: Saves your loved ones time, money and most of all, stress when you create a Revocable Trust by avoiding the process of probate.
  • Originals not Needed: Whereas an original Will must be present to be validated during the probate process, since Revocable Trusts do not go through probate, an original is not required, which can greatly simplify things upon your demise.
  • Continuous Management: Even if you become incapacitated, as long as the Revocable Trust was funded, assets within it will continue to be managed without interruption.
  • Availability of cash to defray immediate expenses.
    Unlike in the instance of testate or intestate succession where a limited grant will be required in order to access any of the Estate monies before confirmation of grant, in the instance of a revocable trust such monies can readily be accessed by Trustees/ beneficiaries to cover immediate needs such as testamentary expenses, outstanding debts/loans etc. without need for court processes.

One more important benefit of Revocable Trusts is that they ensure property and assets remain readily available for you even if you become incapacitated. The disadvantage of this arrangement is that while you are living, a Revocable Trust does not protect your assets from creditors.

What is an Irrevocable Trust?

On the other hand, an Irrevocable Trust is one that cannot be easily amended, changed or terminated once it is signed off. An Irrevocable Trust can only be modified under very limited circumstances and invariably such changes must be approved or consented to by all named beneficiaries. Unlike a revocable trust, an Irrevocable Trust is able to protect assets from judgements and creditors. Therefore, if you have a high-profile career or are otherwise likely subject to lawsuits, holding assets through an Irrevocable Trust may be a good idea.

How to determine which Type of Trust is Right for You

Most people create a Trust for a very specific reason. They want to protect their estate and make their wishes for the future clearly known. Knowing which is best, a Revocable Trust versus an Irrevocable Trust, really just depends on what level of protection you need.
If you want to remain in control of your estate, then for obvious reasons, a Revocable Trust may be the way to go. The ability to change and modify your Trust in the future is a huge benefit for many people. Nevertheless, it is not always the best route.

If you have a very large estate or if you are concerned about potential liens or judgements against you, an Irrevocable Trust is best route for you. An Irrevocable Trust means you can protect yourself, your loved ones and your estate against future legal action. An Irrevocable Trust can be employed to reduce personal income and capital gains taxes by shifting those to the Trust and away from you.

How to determine which Type of Trust is Right for You

Most people create a Trust for a very specific reason. They want to protect their estate and make their wishes for the future clearly known. Knowing which is best, a Revocable Trust versus an Irrevocable Trust, really just depends on what level of protection you need.
If you want to remain in control of your estate, then for obvious reasons, a Revocable Trust may be the way to go. The ability to change and modify your Trust in the future is a huge benefit for many people. Nevertheless, it is not always the best route.

If you have a very large estate or if you are concerned about potential liens or judgements against you, an Irrevocable Trust is best route for you. An Irrevocable Trust means you can protect yourself, your loved ones and your estate against future legal action. An Irrevocable Trust can be employed to reduce personal income and capital gains taxes by shifting those to the Trust and away from you.

How to determine which Type of Trust is Right for You

  • Would you want to protect your assets from creditors?
  • Do you have complex assets that require professional stewardship?
  • Do you have a family member who is unable to manage their affairs due to intellectual impairment or addiction?
  • Do you have a family member who is at risk of divorce, bankruptcy or litigation?
  • Are you part of a blended family?
  • Are you interested in tax savings for your beneficiaries?

Would you like to support charitable causes now or as part of your estate?

Key benefits of corporate trustees

Also known as a professional trustee, the benefits of appointing a corporate trustee include:-

  • Assistance with difficult or controversial decision-making.
  • Assistance with trustee processes and regulatory requirements.
  • Reduced burden on family trustees.
  • Mitigating the risk and consequences of any conflict of interest.
  • Continuity of decision making by avoiding any disruption caused by the absence or retirement of an individual partner.

There are many benefits of having a corporate trustee. Some of these advantages include:-

  • limited liability for individuals, as the company is a separate legal entity. This means that if there are any legal issues with the trust, the company is legally responsible and not the directors that are controlling it;
  • easier separation of trust assets and personal assets as they are held in different names. As a result, it is relatively straightforward to distinguish which of a person’s assets are part of the trust;
  • greater asset protection. If a person gets sued, for example, assets held in a separate trust with a corporate trustee are the company’s assets and not the person’s; and
  • simpler succession and control of the trust in the event of death. Since a company cannot ‘die’, the company continues to act as trustee if something happens to one of its directors and the corporate trustee must simply replace its director. The title to the assets would not change, so the trust’s assets do not need to be transferred in the case of death of a director.

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