Not everyone has a family member who can serve as trustee. A family trustee may have conflicts of interest or lack the skills to manage money and tax returns. When that is the case, you have two main choices: a bank trust department or a licensed professional trustee. Each has different strengths, costs, and limits.
Banks and Trust Companies
Banks and trust companies manage assets as a service. A corporate trustee at a bank comes with certain features:
- Minimum asset rules. Most banks require $300,000 to $5 million or more. If your estate falls below their cutoff, they will say no.
- Yearly percentage fees. Banks charge 0.5% to 2% of trust assets per year. On a $500,000 trust, that is $2,500 to $10,000 a year, no matter how much work they do.
- Set process. Banks follow standard steps. You may not have one point of contact. Your trust could be run by a rotating team.
- Investing included. A corporate trustee usually handles the trust's investment choices as part of their fee. This helps families who want hands-off care.
- No POA services. Banks will not serve as your healthcare or financial power of attorney. They handle the trust only.
A bank trustee serves as a neutral third party. This can cut down family conflict. But the process may feel cold. Some families get frustrated when their trust officer changes every few years.
Licensed Professional Fiduciaries
A professional trustee licensed by the Arizona Supreme Court offers a different path. They are regulated under Arizona Code of Judicial Administration 7-201 and 7-202.
- No minimum asset rules. They handle estates of all sizes, from small to complex.
- Hourly billing. They charge $65 to $250 per hour. Simple bill paying costs less than complex tax work or real estate deals.
- Personal bond. You work with one person, not a department. They get to know your family and your wishes.
- Broader services. Unlike banks, they can serve as your healthcare and financial power of attorney. One person can handle your trust, your finances, your tax returns, and your medical choices if needed.
- Bonded and insured. Licensed fiduciaries (people with a legal duty to act in your best interest) in Arizona must be bonded and carry liability insurance.
Cost Comparison: Corporate Trustee vs. Individual Trustee
The right choice often comes down to estate size and what you need:
- For a $500,000 trust, a bank might charge $5,000 to $10,000 per year. A fiduciary billing 10 hours per month at $100/hour costs about $12,000 per year. But that includes hands-on care and POA services the bank would not offer.
- For a $2 million trust, the bank fee could be $10,000 to $40,000 per year. A fiduciary's hourly billing may come in lower for simple trusts. They only charge for time they spend.
Under A.R.S. 14-10708, all trustees deserve "fair" pay. What counts as fair depends on the size of the estate, the duties, and local norms.
Avoiding Conflicts of Interest
Both options beat a family trustee when it comes to conflicts of interest. A sibling serving as trustee may face pressure from other heirs. A professional makes investment choices based on the trust terms, not family politics. This can save bonds between family members and lower the chance of lawsuits.
When to Consider Each Option
- A bank or corporate trustee may be right if you have a large, complex estate and want big-firm level investing with standard oversight.
- A professional fiduciary (individual trustee) may be better if you have a smaller or mid-sized estate, want a personal bond, need POA services, or want someone who handles the details of your care and finances.
Partner attorneys at RJP Estate Planning work with trusted fiduciaries. They can help you weigh which option fits your family dynamics and estate size.