The High Cost of a Corporate Trustee

by | Aug 2, 2011

A corporate trustee is a bank or a licensed trust company that provides trustee services on a professional basis.  A corporate trustee may be as large as the trust department of Bank of America or the Northern Trust Company, or a little organization you have never heard of.  All corporate trustees charge for their services.  Some on a flat fee basis, some as a percentage of assets under management.  How much a trustee will charge depends on what it is required to do under the trust agreement.

When setting up a domestic trust the use of a corporate trustee is not usually required.  Our clients will often have family members or friends who are willing to act as a trustee of a trust.  However, when the trust is being set up offshore, the use of a corporate trustee is unavoidable.  What will it cost to use a corporate trustee in a foreign country?

According to STEP’s 2010 Trust Company Benchmark survey, trustee fees in jurisdictions ranging from the South Pacific and the Caribbean to Europe, will range from $3,000 per year to as high as $50,000.  Expect to pay the higher range of fees ($30,000 to $50,000) in Europe (Channel Islands, Switzerland, etc.), less than $20,000 in Asia (Hong Kong, Singapore) and $3,000 to $5,000 in most Caribbean and South Pacific jurisdictions.  Often the fees referenced above are for exactly the same type of work.  This means that a trust company based out of Zurich is simply a lot more expensive to deal with than a trust company based out of Singapore, without a corresponding increase in services provided.

Over the past two decades we have developed excellent relationships with wonderful and reputable trust companies in the South Pacific (Cook Islands) as well as the Caribbean (Nevis and St. Vincent).  These trust companies will generally charge a flat fee of $3,000 per year, regardless of the value of assets under management.  The fees may be a little higher when the trust company is expected to actively invest and manage assets and regularly deal with contentious beneficiaries.

If you are interested in learning which trust companies we do business with, we will happily provide a reference.  Just call or email us.

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