By: Martin M. Shenkman, CPA, MBA, JD
A bank or trust company can serve as a trustee of a trust. They are referred to as an "institutional trustee". Many trust documents require the appointment of an institutional trustee for a range of reasons. The most common is professional management of assets, and independence. However, there are many purposes for naming an institution. Another example is that you may wish a trust you set up to be able to be governed by the laws of a state, such as Delaware, which has very sophisticated and favorable laws for trusts. If you live in another state, you might have to appoint a bank or trust company in Delaware to serve as a trustee or co-trustee in order to avail yourself of the laws in Delaware.
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