Our clients frequently ask for our fiduciary services. As personal representatives and independent trustees we act compassionately, professionally and without bias. Experience has shown that we can often save time and expense by serving our families in this fashion.
The choice of a trustee for the administration of your revocable or irrevocable trust is, it goes without saying, essential to your estate plan. The range of trustee choices is as varied as the population itself. However, there are times where simply choosing family members as trustees is not sufficient to fill this important role. Increasingly, clients are choosing us to serve as professional trustees for their families.
There are many reasons to look outside the family for a trustee. Click on an important factor below to learn more.
Appointing a family member as a trustee is often seen as a reward for good behavior and leadership within the family. Given the amount of work involved and the stress of dealing with family members, and the multiple financial, tax and legal issues, it is hardly what I would call a prized position. Experience has also shown that the child or relative who covets the position of trustee, may also be hungry for power and influence in such a way that may cause, rather than assuage, family tensions, which is something else to consider.Rather than assume that a family member wants this position, it may be better to be sure, first, that it is understood the kind of work, responsibility and potential liability involved. The buck stops with the trustee as far as making decisions on priorities, liquidating of assets, establishing deadlines for family involvement such as cleaning out a home, and the making of discretionary distributions of money and property.How these tasks are handled can make or break the trustee’s family relationships. Popularity should not be at issue, but sometimes making decisions can sour relationships for a long time to come, even if they’re made after deliberation and advice, and in accordance with “mom and dad’s wishes.”Posting a professional as trustee can alleviate the problems associated with mixing business and pleasure within the family.
Sometimes family members are clearly too busy, preoccupied with their own lives, and occasionally they are simply incapable of the multitasking necessary to be a successful trustee.Our test of whether family members should be chosen includes life experience, trustworthiness, diligence to complete tasks, ability to communicate effectively with other family members, patience for following trust rules, dealing with lawyers and accountants, attending promptly with deadlines, and seeing a project through to the end with a complete accounting of activity. You have to ask yourself, “Does my son, daughter, etc. possess these qualities?”Typically, families enjoy one or two members who have many of these characteristics. What the family members may lack is time.What our office offers is the time that very often is missing from the lives of otherwise capable individuals. After decades of trust and estate administration, we can offer the expertise and dedicated time you are looking for.
While trustees can be chosen to work together from each family, most of the time mom and dad perceive of one person from one side of the family as an obvious choice. The choice is “obvious” to them, but not necessarily to the heirs on each side. It may be difficult for this person to remain balanced and impartial in many cases. Therefore, posting an individual who is independent and professional can make the difference between a successful and harmonious transfer and one that is uncomfortable or even acrimonious.
Given that there are deadlines for the filing of taxes, providing accounts to beneficiaries, and court filings in some cases, as well as liability for decisions on when to liquidate investments that may be volatile, and similar loaded judgments, it is little wonder that trustees are sued for their breach of fiduciary duty. Arguably, family members who were not trained professionals are held to a lower standard and therefore may have less potential for damage awards against them. If a family trustee is liable, chances are he or she does not have any errors and omissions insurance to cover their liability. If they are successful in defending a lawsuit, then they can expect the trust to pay for the attorneys fees involved, but otherwise they may be on the hook to pay their own way, which can be very costly.Having your family member trustees held to a lower standard should not necessarily give you peace of mind. Presumably, you want your trustees to be held to a high standard of conduct. As professional trustees ourselves, we have to hold to high standards for the many responsibilities involved with settling an estate.
While such professionals should have many of the skills required, unless they have extensive experience, they will be learning on the job. But it is wrong to think that just because one has a Doctor of Laws degree or is a Certified Public Accountant, he or she has the requisite skills to complete a trust administration professionally.In our office, we did not seek out trustee appointments until after nearly 3 decades of experience in the field. Our expectation is that senior attorneys will remain involved in the administration of trusts and estates while training others to take on more and more responsibility, producing experience and reliability to complete estate and trust administrations that are multiplying weekly.
Sometimes, being put in the position of having to say “no” to a beneficiary in response to a request is too much to ask of our family members when it comes to administering a trust for their siblings, nieces and nephews, and so on. As professionals, we can be objective, and still find satisfaction in carrying out our clients’ wishes, difficult as it may be at times. Beneficiaries with special needs and handicaps are a niche for us as well.
In this position, we take on the administration of the estate immediately after death and conscientiously and efficiently, usually for a fixed fee we process the creation of trust shares, tax filings, distributions, liquidations and accounting necessary to complete the settlement of the estate on behalf of the family. This form of administration is temporary and in preparation for a final distribution to individuals or to trustees who will carry on the permanent job of looking after the beneficiary’s interests. Sometimes those permanent trustees are the beneficiaries themselves, acting as their own trustee. We will help those permanent trustees get established and seek to provide a smooth transfer of administrative authority as quickly as possible.
Suppose your daughter inherits from you through an Inheritance Trust, and she wishes to pay off her mortgage with the trust funds. As her own trustee, she’d have the authority to do that without even having to weigh the idea against the the terms of the trust.
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