Rethinking Corporate Trustees: The Simple Path to First Tier Trust Jurisdiction
By Steven J. Oshins, Esq., AEP (Distinguished)
Many estate planners continue to overlook one of the most powerful tools available to their clients: using a corporate trustee in a toptier trust jurisdiction. The hesitation usually stems from two persistent misconceptions – that corporate trustees are difficult to work with and that they are expensive. In reality, neither belief holds up, and the result is that roughly 99% of planners unintentionally deprive their clients of substantial tax savings, stronger asset protection, and enhanced longterm planning opportunities.
Why First Tier Trust States Matter
Only a small number of jurisdictions qualify as true firsttier trust states. Trusts sitused in these states often enjoy:
- The ability to avoid state income taxes on undistributed taxable income
- Superior creditor protection, even against divorcing spouses
- Highly flexible decanting statutes that allow trustees to fix problems or enhance trust provisions
- The opportunity to extend dynasty trust durations far beyond what most states allow
These advantages are significant, yet they remain underutilized because of misunderstandings about how easy it is to access them.
Misconception #1: Using a Corporate Trustee Is Difficult
This belief is widespread and completely incorrect.
Establishing jurisdiction in a favorable state is often as simple as naming a corporate cotrustee in the opening paragraph of the trust agreement and adding a signature block.
The corporate trustee is typically granted limited powers, serving either as:
- a jurisdictional trustee, or
- a distribution trustee
In both cases, the corporate trustee’s responsibilities are intentionally narrow. They do just enough to establish jurisdiction, and nothing more, exactly what most clients prefer.
Misconception #2: Corporate Trustees Are Costly
This misconception persists because many people associate corporate trustees with full investment management. That role is more expensive and for many families, it is the right choice. But that is not the focus here.
When the goal is simply to obtain jurisdiction, the cost is minimal.
Option 1: Jurisdictional Trustee
- Performs only the limited tasks required by state law
- Often charges a small flat annual fee
- Ideal when the client wants the benefits of the jurisdiction without ongoing trustee involvement
Option 2: Distribution Trustee
- Holds authority over distributions
- Still a limited role for many trusts with few or no distributions
- Also typically lowcost and sufficient to establish jurisdiction
In either structure, numerous corporate trustees offer these services at very modest flat fees. This is fair to both the client and the trustee.
Why Estate Planners Should Rethink Their Approach
The failure to use outofstate corporate trustees is not a harmless oversight. It often results
in:
- Missed taxsaving opportunities
- Weaker asset protection
- Less flexible trust modification options
- Shorter dynasty trust durations
- By embracing the simple, lowcost use of corporate trustees in firsttier jurisdictions, planners can dramatically improve outcomes for clients and their families.
Conclusion
The idea that corporate trustees are difficult or expensive is outdated and inaccurate. With minimal effort and modest cost, estate planners can leverage firsttier trust jurisdictions to deliver substantial tax benefits, stronger protection, and longterm planning advantages. A small shift in approach can produce major gains for clients — and it begins with rethinking how corporate trustees are used.
ABOUT THE AUTHOR
Steven J. Oshins, AEP (Distinguished) is a member of the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011. He was named one of the 24 “Elite Estate Planning Attorneys” and the “Top Estate Planning Attorney of 2018” by The Wealth Advisor and one of the Top 100 Attorneys in Worth. He is listed in The Best Lawyers in America® which also named him Las Vegas Trusts and Estates/Tax Law Lawyer of the Year in 2012, 2015, 2016, 2018, 2020, 2022, 2024 and 2026. He can be reached at 702-341-6000, ext. 2 or [email protected]. His law firm’s website is www.oshins.com