- EXTERNAL TRUSTEES ARE EXPERTS.
- EXTERNAL TRUSTEE OBJECTIVE.
- AN EXTERNAL TRUSTEE ASSUMES RESPONSIBILITY.
- EXTERNAL TRUSTEES PROVIDE FIDUCIARY INSURANCE.
External trustees often have the experience and knowledge of all the issues that arise in connection with an ESOP. The Aegis team has over 65 years of ERISA experience making us uniquely qualified to fulfill the fiduciary obligations of trustee. Because Aegis’s only business is providing trustee services we have the time and resources to perform those services properly. A sponsoring company can benefit from working with the many professionals of the Aegis team.
A core ERISA concept is that the trustee must act exclusively for the benefit of ESOP participants. An internal trustee may have difficulty distinguishing their duties to their employer from his or her duties to participants. Using an external independent fiduciary such as Aegis assures that there are no conflicts of interest. Participants of the plan can be comfortable knowing an objective expert will be negotiating the transaction on their behalf and managing the plan assets.
The Department of Labor overseas ESOP transactions and administration. Under ERISA the trustee is individually liable for breaches of fiduciary duty. An external trustee is better equipped to comply with ERISA and defend its fiduciary decisions against potential legal action by the Department of Labor or class actions by participants.
Unlike most internal trustees, external trustees frequently maintain fiduciary insurance to cover claims third parties make against them. Because a trustee is often indemnified by the company sponsor for all claims against the trustee involving the company’s ESOP (assuming the trustee has not committed a fiduciary breach under ERISA), the insurance the trustee maintains can be used to defray the company’s indemnification liability. (Aegis maintains sufficient insurance to cover any losses associated with claims by third parties.)
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